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XAD company is reviewing the behaviour of its various activities. XAD is considering various costs and has identified two categories of overhead: maintenance and inspection.
XAD company is reviewing the behaviour of its various activities. XAD is considering various costs and has identified two categories of overhead: maintenance and inspection. Costs expected for these categories for the coming year are as follows: Maintenance $120,000 Inspection 200,000 The plant currently applies overhead using direct labor hours and expected capacity of 80,000 direct labor hours. The following data has been assembled for use in developing a bid for a proposed job: Direct materials $1,500 Direct labor $5,000 Machine hours 400 Number of inspections 6 Direct labour hours 750 Total expected machine hours for all jobs during the year are 40,000, and the total expected number of inspections is 2,500. Using activity-based costing and the appropriate cost drivers, the total cost of the proposed job would be a. $9,230 b. $8,180 c. $2,250 d. $1,680 e. Generally speaking, the activity-based cost figure is "less accurate" than the traditionally-derived cost figure
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