The Overdale plant has two categories of overhead: maintenance and inspection. Costs expected for these...
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Accounting
The Overdale plant has two categories of overhead: maintenance and inspection. Costs expected for these categories for the coming year are as follows:
Maintenance $120,000
Inspection $200,000
The plant currently applies overhead using direct labor hours and expected capacity of 80,000 direct labor hour. Overdale uses only one overhead rate for the entire plant.
The following data have been assembled in developing a bid for a proposed job:
Direct materials $1,000
Direct labor $2,000
Machine hours 1,916
Number of inspections 6
Direct labor hours 1,675
Total expected machine hours for all jobs during the year are 40,000, and the total expected number of inspections is 2,000.
Assume the traditional system of overhead allocation. Using direct labor hours to assign overhead, the total cost of the potential job would be
Group of answer choices
$3,000
None of the answers are correct.
$1,600
$9,700
$6,000
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