Fox Hunting Gear manufactures two products: camouflage jackets and camouflage hats.The company makes 50,000 jackets and 20,000 hats each year.Information for overhead costs and for the two products appears below.

\begin{array}{|l|c|c|c|c|}\hline{\text { Activity }} & \text { Driver } & \begin{array}{c}\text { Estimated } \\\text { Total } \\\text { Overhead } \\\text { Cost }\end{array} & \text { Jackets } & \text { Hats } \\\hline \text { Setups } & \text { \# of setups } & \$ 200,000 & 500 \text { setups } & 1,500 \text { setups } \\\hline \begin{array}{l}\text { Ordering } \\\text { parts }\end{array} & \text { \# of parts } & 300,000 & 60,000 \text { parts } & 40,000 \text { parts } \\\hline \text { Machining } & \begin{array}{c}\text { \# of machine } \\\text { hours }\end{array} & 600,000 & \begin{array}{c}12,000 \text { machine } \\\text { hrs. }\end{array} & \begin{array}{c}6,000 \text { machine } \\\text { hrs. }\end{array} \\\hline \text { Inspections } & \text { \# of inspections } & 400,000 & 10,000 \text { inspections } & 40,000 \text { inspections } \\\hline \text { Shipping } & \text { \# of shipments } & 300,000 & 10,000 \text { shipments } & 10,000 \text { shipments } \\\hline \begin{array}{l}\text { Total } \\\text { overhead }\end{array} &&{\underline{\$ 1,800,000}} \\\hline\end{array}

Fox Hunting Gear uses activity-based costing.What is the rate per inspection that should be used to assign inspection cost to hats?
A)$10 per inspection
B)$40 per inspection
C)$8 per inspection
D)$16 per inspection

Service Department Costs Are Allocated to Producing Departments

Multiple Choice

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