COTB MC Qu$.4-11($Algo$)$ A company produces numerous blends of$...$

A company produces numerous blends of coffee, two of which are known as the French Blend and the Italian Blend. The company$$s ABC system divides its total manufacturing overhead of $$1,997,500$ into four activity cost pools as shown below.

Activity Activity Measure Expected Activity Estimated Cost

Purchasing Purchase orders $1,500$ orders $ $345,000$

Materials handling Number of setups $1,800$ setups $ $540,000$

Quality control Number of batches $600$ batches $ $210,000$

Roasting Roasting hours $95,000$ hours $ $902,500$

Data regarding production of the French and Italian blends is as follows:

French Blend Italian Blend

Expected sales $100,000$ pounds $7,000$ pounds

Batch size $10,000$ pounds $1,250$ pounds

Setups $3$ per batch $3$ per batch

Purchase order size $20,000$ pounds $500$ pounds

Roasting time per $100$ pounds $0\mathrm{.}5$ hours $0\mathrm{.}5$ hours

Assume the company uses activity$-$based costing. How much overhead cost would be assigned from the Purchasing activity to the Italian Blend based on its expected sales?

Multiple Choice

$$110,000$

$$1,800$

$$1,100$

$$3,220$