The Mega Construction Company recently switched to activity-based costing (ABC) from the department allocation method. The department method allocated overhead costs at a rate of $60 per machine hour. The cost accountant for the Finishing Department has gathered the following data:
| Activity | Cost Drivers | Amount | ||
| Material handling | Tons of material handled | $ | 80 | |
| Machine setups | Number of production runs | 3,750 | ||
| Utilities | Machine hours | 25 | ||
| Quality control | Number of inspections | $ | 500 | |
During April, Mega purchased and used $100,000 of direct materials at $20 per ton. There were eight (8) production runs using a total of 12,000 machine hours in April. The manager of the Finishing Department needed 12 inspections. Actual overhead costs totaled $820,000 for the month.
How much overhead costs were applied to the Work-in-Process Inventory during April using traditional costing?
a.) $536,000.
b.) $720,000.
c.) $736,000.
d.) $820,000.
