Merry Co. has two major categories of factory overhead: material handling and qu

ID: 2370842 • Letter: M

Question

Merry Co. has two major categories of factory overhead: material handling and quality control. The costs expected for the categories for the upcoming year are as follows:

Material handling $120,000

Quality Inspection $200,000

The plant currently applies overhead based on direct labor hours. The estimeated direct labor hours are 80,000 per year. The plant manager asked to submit a bid and assembles the following data on a proposed job:

Direct materials $4,000

Direct Labor (2,000 hours) $6,000

What amount is the estimated product cost on the proposed job?

A. 8,000

C. 14,000

D. 18,000