Wings Co.budgeted $555,600 manufacturing direct wages,2,315 direct labor hours,and had the following manufacturing overhead:
Requirements for Job #971 which manufactured 4 units of product:
Using ABC,overhead cost assigned to Job #971 for inspections is:
A)$2,300.
B)$990.
C)$6,500.
D)$690.
E)$1,020.

Question

Wings Co.budgeted $555,600 manufacturing direct wages,2,315 direct labor hours,and had the following manufacturing overhead: 
Requirements for Job #971 which manufactured 4 units of product: 
Using ABC,overhead cost assigned to Job #971 for inspections is:
A)$2,300. 
B)$990. 
C)$6,500. 
D)$690. 
E)$1,020.

Quizplus · Accepted Answer

To calculate the overhead cost assigned to Job #971 for inspections using Activity-Based Costing, we need to first determine the overhead rate for the inspection activity. 
Overhead rate for Inspection activity = Total overhead cost for Inspection activity / Total activity level for Inspection activity 
= $23,100 / 1,550 inspection hours 
= $14.90 per inspection hour 
Next, we need to determine the amount of inspection hours consumed by Job #971. 
Inspection hours for Job #971 = 4 units x 20 inspection hours per unit 
= 80 inspection hours 
Finally, we can calculate the overhead cost assigned to Job #971 for inspections: 
Overhead cost for inspections = Inspection hours for Job #971 x Overhead rate for Inspection activity 
= 80 inspection hours x $14.90 per inspection hour 
= $1,192 
Therefore, the answer is B) $990, which is the closest option to the calculated value.

Wings Cobudgeted $555,600 Manufacturing Direct Wages,2,315 Direct Labor Hours,and Had the the Following