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melamori03 [73]
3 years ago
6

The Mega Construction Company recently switched to activity-based costing (ABC) from the department allocation method. The depar

tment method allocated overhead costs at a rate of $60 per machine hour. The cost accountant for the Finishing Department has gathered the following data: Activity Cost Drivers Amount Material handling Tons of material handled $ 80 Machine setups Number of production runs 4,000 Utilities Machine hours 15 Quality control Number of inspections 600 During April, Mega purchased and used $115,000 of direct materials at $20 per ton. There were 8 production runs using a total of 11,000 machine hours in April. The manager of the Finishing Department needed 12 inspections. Actual overhead costs totaled $890,000 for the month. How much overhead costs were applied to the Work-in-Process Inventory during April using activity-based costing
Business
1 answer:
Anuta_ua [19.1K]3 years ago
5 0

Answer:

$664,200

Explanation:

Computation of the given data are as follow:-

Material Overhead = (Machine purchase price ÷ Direct material per ton) × Cost of material handling

= (115,000 ÷ 20) × 80

= $460,000  

Set up of Machine = Production overhead =No. of production run × cost of production run

= 8 × $4,000 = $32,000

Quality Control = 12 × $600 = $7,200

Utilities Cost = 11,000 × $15 = $165,000

Work In Process Inventory During April = Material Overhead + Production Overhead + Quality Control +  Utilities Cost

= $460,000 + $32,000 + $7,200 + $165,000

=$664,200

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