Reference no: EM132638664

The Inground Sprinkler Supply sells sprinkler systems suited for large or small yards. The company has decided to adopt an activity-based costing system. Last year the company incurred $1,000,000 in overhead costs related to the following activities:

Activity Purchasing Material handling Quality inspection

Allocation Base number of purchase orders number of shipments received number of inspections
Overhead Cost
$ 350,000
200,000
450,000

The activities for large and small yard systems were as follows: purchase orders shipments received inspections

Large            Small
15,000        20,000
7,500        12,500
11,500        11,000

Question 1: If a customer requested a bid on a specially designed sprinkler that would probably require four inspections, how much quality inspection overhead would you include in the bid?