Vex Corporation Manufactures a Variety of Products Job #812 for the Current Year Required 15 Machine-Hours and Vex

Multiple Choice

Vex Corporation manufactures a variety of products. In the past, Vex had been using a traditional overhead allocation system based on machine-hours. For the current year, Vex decided to switch to an activity-based costing system using machine-hours and the number of inspections as measures of activity. Information on these measures of activity and related overhead rates for the current year are as follows: $\begin{array}{lrr} \text { Estimated Activity } & \text { Prederemined} &\\ &\text {Overhed Rate}\\ \text {Machine-hours. } & \text { £8 per machine-hour } \\ \text { Number of inspections} & \text { £40 per inspection} \\\end{array}$

Job #812 for the current year required 15 machine-hours and 2 inspections. Would this job have been overcosted or undercosted under the traditional system and by how much?

A) Undercosted by £36
B) Undercosted by £44
C) Overcosted by £80
D) Undercosted by £80