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:

	Costs	Cost Driver	Expected 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.

PART A:

Assume the company is exploring the use of activity based costing.

If the company used activity-based costing, the total overhead cost that would be assigned to the job for material handling is $_______________.

If the company used activity-based costing, the total overhead cost that would be assigned to the job for maintenance is $___________.

If the company used activity-based costing, the total overhead cost that would be assigned to the job for inspections is $______________.

If the company used activity-based costing, the total material costs plus the total direct labour costs assigned to the job would be $___________.

If the company used activity-based costing, the total cost of the job would be $__________.

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 $_____________.

If the company allocated overhead to the job using a plantwide overhead rate, the total cost of the job would be $__________.

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.

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.