Tyler 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 2011 and their allocation bases are as follows:

Tyler Champs expects to produce 10 custom-built motorcycles for the year. The motorcycles are expected to require 30 inspections, 10 setups, and 200 maintenance hours.

Requirements 

1. Compute the cost allocation rate for each activity.

2. Compute the indirect manufacturing cost of each motorcycle.

Transcribed Image Text:

Activity Total Budgeted Cost Allocation Base Inspection 5 6,600 Number of inspections Machine setup 26,000 Number of setups Machine maintenance 8,000 Maintenance hours Total $ 40,600