Question :
Wake Construction installs and manufactures standard and custom-made cabinetry for residential homes. Last year, the company incurred $200,000 in overhead costs. After executing activity-based costing (ABC), the company's accountant identified the subsequent related information:
Activity Allocation Base Proportion of Overhead Cost
Material delivery and handling Number of deliveries 30%
Inspections Number of inspections 25%
Supervision Hours of supervisor time 20%
Purchasing Number of purchase orders 25%
The number of activities for standard and custom-made cabinets is as follows:
Standard Custom-made
Number of deliveries 200 100
Number of inspections 600 400
Hours of supervisor time 1,800 2,200
Number of purchase orders 1,000 1,000
In the past year, Wake received a customer order for a set of custom-made cabinets that would need the following:
Direct labor cost (25 hours at $15 per hour) $375
Direct materials (wood) (900 ft at $3.00 per foot) $2,700
Number of deliveries 3
Number of inspections 5
Hours of supervisor time 5
Number of purchase orders 3
Refer to the Wake Construction information given above. How much overhead should be applied to the above customer order?