Question

Wings Co. budgeted $555,600 manufacturing direct wages, 2,315 direct labor hours, and had the following manufacturing overhead:

Overhead Cost Pool - Budgeted O/H $ - Budgeted Level for Cost Driver - O/H Cost Driver
Materials Handling $160,000 3,200 lbs. Material Weight
Machine Setup 13,200 390 S/U�s # of S/Us
Machine Repair 1,380 30,000 Mach. Hrs Machine Hrs.
Inspections 10,560 160 Inspections # of Inspections
Requirements for Job #971 which included 4 Units of Production:
D/L Hours = 20 Hours
D/Mat�ls = 130 lbs.
Machine S/U = 30 Set-ups
Machine Hrs. = 15,000 Machine Hours
Inspections = 15 Inspections.
Using ABC, the materials handling overhead cost assigned to Job #971 is:______.
a. $2,300.
b. $990.
c. $6,500.
d. $690.
e. $1,020.

Answer 1

c. $6,500.

Step-by-step explanation:

The computation of the material cost assigned to Job 971 is as follows:

= Budgeted Overhead × Material Weight for Job 971 ÷ Total Weight

= $160,000 × 130 ÷ 3200

=$6,500

Hence, the material cost assigned to Job 971 is $6,500

Therefore the correct option is c.