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Wonder Moon Manufacturing Inc. (the company) is a lawn mower manufacturer, and has three different categories of overhead. The overhead costs for each of the

Wonder Moon Manufacturing Inc. ("the company") is a lawn mower manufacturer, and 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
Maintenance $400,000 Machine hours 40,000
Inspection $240,000 Inspections 6,000
Materials handling $140,000 Material moves 7,000

The company applies overhead using a predetermined overhead rate based upon a budgeted direct labour hours of 60,000.

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:

Number of material moves 50
Number of inspections 130
Number of machine hours 4,100
Number of direct labour hours 11,500
Direct materials $40,000
Direct labour $44,000

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

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

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

4. If the company used activity-based costing, calculate the total of material cost + direct labour cost that would be assigned to the job

5. If the company used activity-based costing, calculate the total cost that would be assigned to the job

6. If the company allocated overhead to the job using a plantwide overhead rate, calculate the total overhead cost assigned to the job

7. If the company allocated overhead to the job using a plantwide overhead rate, calculate the total cost assigned to the job

8. It would not be appropriate to adopt an ABC policy if which of the following were true:

a)

The cost of developing individual cost pools was too great.

b)

All of the other answers are correct.

c)

All products consumed resources in a similar manner.

d)

The products being produced were quite similar.

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