Question 21:

The Mega Construction Company recently switched to activity-based costing (ABC) from the department allocation method. The department method allocated overhead costs at a rate of $40 per machine hour. The cost accountant for the Finishing Department has gathered the following data:

Activity	Cost Drivers	Amount
Material handling	Tons of material handled	$	60
Machine setups	Number of production runs		3,750
Utilities	Machine hours		25
Quality control	Number of inspections		600

During April, Mega purchased and used $145,000 of direct materials at $20 per ton. There were 8 production runs using a total of 13,000 machine hours in April. The manager of the Finishing Department needed 12 inspections. Actual overhead costs totaled $920,000 for the month.

How much overhead costs were applied to the Work-in-Process Inventory during April using activity-based costing?

a) 797,200

b) 872,200

c) 520,000

d) 920,000