Question: Please show me how to solve this step by step! A company incurs $3720000 of overhead each year in three departments: Processing, Packaging, and Testing.

Please show me how to solve this step by step!

A company incurs $3720000 of overhead each year in three departments: Processing, Packaging, and Testing. The company performs 800 processing transactions, 200000 packaging transactions, and 2000 tests per year in producing 400000 drums of Oil and 600000 drums of Sludge. The following data are available:

Department Expected Use of Driver Cost

Processing 800 $1560000

Packaging 200000 1560000

Testing 2000 600000

Production information for the two products is as follows:

Oil Sludge

Department Expected Use of Driver Expected Use of Driver

Processing 300 500

Packaging 120000 80000

Testing 1600 400

The amount of overhead assigned to Oil using ABC is

$2001000.

$1719000.

$1860000.

$1440000.

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