Turbo Champs Corp. uses activity-based costing to account for its motorcycle manufacturing process. Company managers have identified three supporting manufacturing activities: inspection, machine setup, and machine maintenance. The budgeted activity costs for 2018 and their allocation bases are as follows: 

Turbo Champs expects to produce 20 custom-built motorcycles for the year. The motorcycles are expected to require 100 inspections, 40 setups, and 100 machine hours. 

Requirements 

1. Compute the predetermined overhead allocation rate for each activity. 

2. Compute the expected indirect manufacturing cost of each motorcycle.

Transcribed Image Text:

Activity Inspections Machine setup Machine maintenance Total Total Budgeted Cost $ 5,700 22,000 6,000 $ 33,700 Allocation Base Number of inspections Number of setups Finishing of machine hours