The Mega Construction Company Recently Switched to Activity-Based Costing (ABC)from

The Mega Construction Company recently switched to activity-based costing (ABC) from the department allocation method.The department method allocated overhead costs at a rate of $60 per machine hour.The cost accountant for the Finishing Department has gathered the following data:
$$\begin{array} { | l | l | r | } \hline \text { Activity } & \text { Cost Drivers } & \text { Rate } \\\hline \text { Material handling } & \text { Tons of material handled } & \$ 80 \\\hline \text { Machine setups } & \text { Number of production runs } & 3,750 \\\hline \text { Utilities } & \text { Machine hours } & 25 \\\hline \text { Quality control } & \text { Number of inspections } & 500 \\\hline\end{array}$$
During April,Mega purchased and used $100,000 of direct materials at $20 per ton.There were eight (8) production runs using a total of 12,000 machine hours in April.The manager of the Finishing Department needed 12 inspections.Actual overhead costs totaled $820,000 for the month.How much overhead costs were applied to the Work-in-Process Inventory during April using traditional costing?

A) $536,000.
B) $720,000.
C) $736,000.
D) $820,000.

Correct Answer:

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