Question

The estimated overhead costs of Aquamarine Company for the month of March are $27,800. The estimated overhead includes $9,450 of ordering costs. The variable rate per order is $15. Determine the total overhead cost if the number of orders has increased by 700 orders.

Answer 1

To calculate the total overhead cost, multiply the increase in the number of orders by the variable rate per order and add it to the estimated overhead costs.

Step-by-step explanation:

To calculate the total overhead cost, we need to determine the increase in the number of orders and then calculate the additional ordering costs.

Given that the variable rate per order is $15, we can multiply the increase in the number of orders by the variable rate to obtain the additional ordering costs.

In this case, the number of orders has increased by 700 orders, so the additional ordering costs would be $15 * 700 = $10,500.

To calculate the total overhead cost, we add the additional ordering costs to the estimated overhead costs. Therefore, the total overhead cost would be $27,800 + $10,500 = $38,300.