Question
Doggle, Inc. has two categories of overhead: maintenance and inspection. Costs expected for these categories for the coming year are as follows: Maintenance $400,000 Inspection
Doggle, Inc. has two categories of overhead: maintenance and inspection. Costs expected for these categories for the coming year are as follows:
Maintenance
$400,000
Inspection
200,000
The following data have been assembled for use in developing a bid for a proposed job:
Direct materials
$3,000
Direct labor
$8,000
Machine-hours
200
Number of inspections
2
Direct labor-hours
400
The practical capacity of machine-hours for all jobs during the year is 12,500, and for inspections is 400. These are the cost drivers for maintenance and inspection costs, respectively.
Using the appropriate cost drivers, the total cost of the potential job is:
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