The Mega Construction Company Recently Switched to Activity-Based Costing (ABC)

Multiple Choice

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:
$\begin{array}{ll}\text { Activity } & \text { Cost Drivers } & \text { Rate}\\\text { Material handling } & \text { Tons of material handled }&\$80 \\\text { Machine setups } & \text { Number of production runs }&3,750 \\\text { Utilities } & \text { Machine hours }&25 \\\text { Quality control } & \text { Number of inspections }&\$500\end{array}$

During April, Mega purchased and used $100,000 of direct materials at $20 per ton. There were 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.
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How much overhead costs were applied to the Work-in-Process Inventory during April using activity-based costing?

A) $536,000.
B) $720,000.
C) $736,000.
D) $820,000.