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What amount of overhead would be allocated to the contract

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Reference no: EM133164149

Question - Catalytic Chemical Corporation has a significant level of manufacturing overhead. After preparing their budget for the next year, management expects the following overhead costs (the cost driver for each overhead cost pool is also shown):

Activity

Total Cost

Cost Driver

Maintenance

$20,000

Machine hours

Materials receiving

80,000

Shipments received

Machine setups

50,000

# of setups

Inspection

30,000

# of inspections

The expected activity for the year for various cost drivers is:

Direct Labor Hours 40,000

Machine Hours 20,000

Shipments Received 4,000

Setups 200

Quality Inspections 8,000

The company is considering accepting a significant production contract. Estimates for the contract are as follows:

Direct materials $100,000

Direct labor (7,500 hours) $150,000

Number of material shipments received 290

Number of inspections 50

Number of setups 35

Number of machine houre 3,000

NOTE: Round all per-unit costs to nearest cent.

Required - What amount of overhead would be allocated to the contract if a company-wide rate based on direct labor hours were used?

Reference no: EM133164149

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