Question
Wake Construction manufactures and installs standard and custom-made cabinetry for residential homes.Last year,the company incurred$200,000 in overhead costs.After implementing activity-based costing(ABC),the company's accountant identified the
Wake Construction manufactures and installs standard and custom-made cabinetry for residential homes.Last year,the company incurred$200,000 in overhead costs.After implementing activity-based costing(ABC),the company's accountant identified the following related information:Proportion Activity Allocation Base of Overhead Cost Material delivery and handling Number of deliveries 30%Inspections Number of inspections 25%Supervision Hours of supervisor time 20%Purchasing Number of purchase orders 25%The number of activities for standard and custom-made cabinets is as follows:Standard Custom-made Number of deliveries 200 100 Number of inspections 600 400 Hours of supervisor time 1,800 2,200 Number of purchase orders 1,000 1,000 During the past year,Wake accepted a customer order for a set of custom-made cabinets that would require the following:Direct labor cost(25 hours at$15 per hour) $375 Direct materials(wood) (900 ft at$3.00 per foot) $2,700 Number of deliveries 3 Number of inspections 5 Hours of supervisor time 5 Number of purchase orders 3 Refer to the Wake Construction information above.How much overhead should be applied to the above customer order? answer is a)$4,050 B)$285 C$3,360 d$975.
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