Reference no: EM132640734

The Inground Sprinkler Supply sells sprinkler systems suited for large or small yards. The company has decided to adopt an activity-based costing system. Last year the company incurred $1,000,000 in overhead costs related to the following activities:

Activity Purchasing Material handling Quality inspection                                                       $ 350,000

Allocation Base number of purchase orders number of shipments received number of inspections  200,000

Overhead Cost                                                                                                               450,000

The activities for large and small yard systems were as follows:

purchase orders shipments received inspections

Large             Small
15,000         20,000
7,500         12,500
11,500        11,000

Problem 1: If a customer requested a bid on a specially designed sprinkler that would probably require four inspections, how much quality inspection overhead would you include in the bid?