Multiple Choice

• $3,080

• $110,000

• $1,100

• $1,800

A company produces numerous blends of coffee, two of which are known as the French Blend and the Italian Blend. The company's ABC system divides its total manufacturing overhead of $1,982,500 into four activity cost pools as shown below. Activity Purchasing Activity Measure Purchase orders. Number of setups Number of batches. Expected Activity 1,500 orders 1,800 setups Estimated Cost $330,000 $540,000 Materials handling Quality control Roasting 600 batches $210,000 Roasting hours 95,000 hours $902,500 Data regarding production of the French and Italian blends is as follows: Expected sales French Blend 100,000 pounds 10,000 pounds Italian Blend 7,000 pounds 1,250 pounds Batch size Setups Purchase order size 3 per batch 20,000 pounds 0.5 hours 3 per batch 500 pounds 0.5 hours Roasting time per 100 pounds Assume the company uses activity-based absorption costing. How much overhead cost would be assigned from the Purchasing activity to the Italian Blend based on its expected sales?