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15 September, 02:15

Nautical Creations manufactures high-end boat accessories for large custom yachts. Nautical has always applied manufacturing overhead using a traditional predetermined overhead rate based on direct labor hours, this year it is $45 per DLH. Nautical is currently evaluating the use of activity-based driver rates to apply manufacturing overhead cost and has assembled the following budgeted amounts and actual activity required to produce Job #258. Activity DriverBudgeted Cost Budgeted ActivityActivity used on Job #258 Machining time $200,000 5,000 hours 600 hours Direct labor time $220,000 10,000hours 800hours Quality inspection time $30,000 2,000 hours 200 hours Using the activity-based costing method of applying manufacturing overhead, the amount of overhead applied to Job #258 would be:

A. $63,000.

B. $44,600.

C. $72,000.

D. $36,000.

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  1. 15 September, 02:22
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    B. $44,600.

    Explanation:

    Machine time rate:

    200,000 / 5,000 = $40

    Direct labor rate

    220,000 / 10,000 = $22

    Quality inspection rate

    30,000 / 2,00 = $15

    Job #258

    600 x $40 +

    800 x $22 +

    200 x $15

    Total overhead : 44600
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