Activity Cost Activity Allocation Base Allocation Rate
Materials.handling. .... Number of parts $ 5.50 per part
Machine setup. ....... Number of setups $ 325.00 per setup
Insertion of parts. ..... Number of parts $ 27.00 per part
Finishing ............. Finishing direct labor hours $ 52.00 per hour
Standard Deluxe
Parts per .wheel...... 8.0 Tallo J VI I . . . . . . . . . . . . . . . . . 10.0 20.0
Setups per 1,000 wheels............... 20.0
Finishing. direct.labor hours per wheel..... 1.5 2.5
Total .direct labor. hours. per. wheel ..... 2.7 - 3.8
The company's managers expect to produce 1,000 units of each model during the year.
1. Compute the total budgeted manufacturing overhead cost for the upcoming year.
2. Compute the manufacturing overhead cost per wheel of each model using ABC.
3. Compute the company's traditional plantwide overhead rate. Use this rate to determine th manufacturing overhead cost per wheel under the traditional system.
