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Regis University Operations And Supply Chain Management Assignment Help - Cost Drivers


Question - Tennco, Inc has two categories of overhead: maintenance and inspection. Costs expected for these
categories for the coming year are as follows:
Maintenance: $300,000
Inspection: $200,000
The following data have been assembled for use in developing a bid for a proposed job:
Direct Materials: $3,000
Direct Labor: $8,000
Machine hours: 400
Number of inspections: 4
The practical capacity of machine hours for all jobs during the year is 25,000, and for inspections is
800. These are the cost drivers for maintenance and inspection costs, respectively. Using the
appropriate cost drivers, the total cost of the potential job is:
A. $11,000
B. $7,200
C. $16,800
D. $15,000

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