Figure 4

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 $1,500

Direct labor $5,000

Machine hours 400

Number of inspections 6

Direct labor hours 750

Total expected machine hours for all jobs during the year are 40,000, and the total expected number of inspections is 2,500.

22. Refer to Figure 4 and assume the traditional system of overhead allocation. Using direct labor hours to assign overhead, the total cost of the potential job would be

A. $9,500

B. $3,000

C. $1,600

D. $6,000

E. $1,000