Ray Manufacturing has four categories of overhead. The four categories and the expected overhead costs for each category for next year are as follows:

Maintenance $510,000

Materials handling $250,000

Setups $ 60,000

Inspection $210,000

Currently, overhead is applied using traditional costing method based on budgeted direct labor hours. Next year budgeted total overhead is $1,030,000 and budgeted machine hours is 60,000 hours.

The company has been asked to submit a bidding price for a proposed job. The plant manager feels that obtaining this job would result in new business opportunities in future years. Usually bids are based upon full manufacturing cost plus 10 percent mark up.

Estimates for the proposed job are as follows:

Direct materials $30,000

Direct labor (8,000 hours) $24,000

Number of materials moves 100 moves

Number of inspections 120 inspections

Number of setups 24 set ups

Number of machine hours 4,000 machine hours

The plant manager has heard of a new way of applying overhead that uses cost pools and cost drivers. Expected activity for the four activity-based cost drivers that would be used are as follows:

Machine hours 60,000 Mhrs

Material moves 2,000 moves

Setups 1,000 setups

Quality inspections 5,000 inspections

16. . If Ray Manufacturing used traditional costing method by using machine hours as the cost driver, the overhead applied to the proposed job would be _____________

A. $82,400

B. $68,667

C. $51,500

D. $77,080

17. If Ray Manufacturing used traditional costing method by using machine hours as the cost driver, the total cost of the proposed job would be _____________

A. $122,667

B. $112,400

C. $106,400

D. $136,400

18. If Ray Manufacturing used activity-based costing (ABC) method to assign overhead, the total overhead applied to the proposed job would be _______________

A. $44,800

B. $62,980

C. $52,980

D. $36,400

19. If Ray Manufacturing used activity-based costing (ABC) method to assign overhead, the total cost of the proposed job would be _________________

A. $106,980

B. $54,000

C. $116,400

D. $1,400