Johnson Manufacturing
Johnson Manufacturing Anticipates Incurring $500 000 in Overhead

Johnson Manufacturing
Johnson Manufacturing anticipates incurring $500 000 in overhead costs this year. After implementing activity-based costing (ABC) , the company’s controller identified the following related information:
$$\begin{array} { l l c } \text { Activity } & \text { Allocation Base } & \text { Proportion of Overhead Cost } \\\hline \text { Purchasing } & \text { Number of purchase orders } & 20 \% \\\text { Machine setups } & \text { Number of setups } & 15 \% \\\text { Production } & \text { Number of machine hours } & 65 \%\end{array}$$
The number of activities expected is as follows:
$\begin{array}{llcc} \text { Total number of purchase orders } &4000\\ \text { Total number of setups } &2000\\ \text { Total number of machine hours} &10000\\\end{array}$

-How much total overhead would be applied to a job that required 1 purchase order,5 setups,and 300 machine hours?

A) $9750.00
B) $9962.50
C) $9937.50
D) $9562.50

Correct Answer:

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