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.

a.$30,850.
b.$25,000.
c.$20,000.
d.$28,850.

Answer 1

To calculate the total overhead cost, we multiply the variable rate per order by the increase in the number of orders and add it to the estimated overhead costs. The correct answer is a. $30,850. option a.

Step-by-step explanation:

To determine the total overhead cost, we need to calculate the increase in overhead costs due to the increase in the number of orders. The variable rate per order is given as $15. The number of orders has increased by 700. Therefore, the increase in overhead costs is 700 x $15 = $10,500.

To find the total overhead cost, we add the increase in overhead costs to the estimated overhead costs for the month of March. The estimated overhead costs are $27,800. So, the total overhead cost is $27,800 + $10,500 = $38,300.

Therefore, the correct answer is a. $30,850.