The 195 Factory produces replacement parts and assemblies for vintage Cessna aircraft. The company is considering replacing its current costing system with an activity-based approach. It has identified three activities: computer-aided design; fabrication; and assembly and finishing. Data regarding these activities has been collected in the table below.

-Two jobs are currently complete and ready for delivery to the customer. One is a wing assembly that required raw materials costing $5,000 and consumed 40 hours of direct labor time. The wing assembly is a standard product that required only one hour of CAD time and three hours of machine time. What amount of overhead would the proposed activity-based costing system assign to this job?
A) $500
B) $3,400
C) $2,000
D) $900

Question

The 195 Factory produces replacement parts and assemblies for vintage Cessna aircraft. The company is considering replacing its current costing system with an activity-based approach. It has identified three activities: computer-aided design; fabrication; and assembly and finishing. Data regarding these activities has been collected in the table below.
 
-Two jobs are currently complete and ready for delivery to the customer. One is a wing assembly that required raw materials costing $5,000 and consumed 40 hours of direct labor time. The wing assembly is a standard product that required only one hour of CAD time and three hours of machine time. What amount of overhead would the proposed activity-based costing system assign to this job?
A) $500 
B) $3,400 
C) $2,000 
D) $900

Quizplus · Accepted Answer

The overhead assigned using activity-based costing would consider the activities involved: CAD time, machine time, and direct labor. The specific rates for these activities are not provided, but the choice B ($3,400) likely reflects the total overhead calculated based on these activities.

The 195 Factory Produces Replacement Parts and Assemblies for Vintage