Reference no: EM132667392

XAD company is reviewing the behavior 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 labor 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.

Problem 1: Using activity-based costing and the appropriate cost drivers, the total cost of the potential job would be

Select one:

a. Generally speaking, the activity-based cost figure is "less accurate" than the traditionally-derived cost figure.
b.$9,230
c. $8,180
d.$2,250
e. $1,680