A company incurs $3,600,000 of overhead each year in three departments: Processing, Packaging, and Testing. The company performs 800 processing transactions, 200,000 packaging transactions, and 2,000 tests per year in producing 400,000 drums of Oil and 600,000 drums of Sludge. The following data are available:

Department	Expected Use of Driver	Cost
Processing	800	$1,500,000
Packaging	200,000	1,500,000
Testing	2,000	600,000

Production information for the two products is as follows:

	Oil	Sludge
Department	Expected Use of Driver	Expected Use of Driver
Processing	300	500
Packaging	120,000	80,000
Testing	1,600	400

The amount of overhead assigned to Sludge using ABC is

	a.	$1,800,000.
	b.	$1,657,500.
	c.	$1,942,500.
	d.	$1,380,000.

Answer rating: 100% (QA)

The correct answer is b 1657500 Notes 1 Activity Rate Department Expected Use of Driver Cost Act... View the full answer