Jefferson Blush Manufacturing Inc. ("the company") has three different categories of overhead. The overhead costs for each of the categories for the next year are as follows: Expected Costs Cost Driver Activity Materials handling $360,000 Material moves 18,000 Maintenance $550,000 Machine hours 55,000 Inspection $30,000 Inspections 10,000 Currently, the company applies overhead using a plantwide predetermined overhead rate based upon a budgeted direct labour hours of 80,000. The company has been asked to submit a bid on a proposed job. In order to submit this bid, the company needs to calculate the total cost of performing this job. Financial details for the proposed job are as follows: Direct materials $55,000 Direct labour $45,000 Number of direct labour hours 15,000 Number of material moves 50 Number of inspections 180 Number of machine hours 3,000 Use the information provided to answer the following questions. If the company used activity-based costing, the total material costs plus the total direct labour costs assigned to the job would be $_ A If the company used activity-based costing, the total cost of the job would be $ A PART B: Assume, instead, that the company continues to use the plantwide overhead application rate. If the company allocated overhead to the job using a plantwide overhead rate, the total overhead cost assigned to the job would be $_ A/ If the company allocated overhead to the job using a plantwide overhead rate, the total cost of the job would be $_ A PART C: If the company decided to continue to use the plantwide overhead application rate, which of the following statements is true? Enter either A or B in the space provided. A. Use of the plantwide rate would cause the company to over-price the job. B. Use of the plantwide rate would cause the company to under-price the job. A/ Part D: Read the following statement and indicate if the statement is TRUE (enter T) or FALSE (enter F). It would be appropriate to adopt an ABC policy if the company produced multiple products and the products were quite similar. A
