Fribourg Instrument. Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 50 range instruments and 300 pressure gauges were produced, and overhead costs ol $89,000 were incurred. An analysis of overhead costs reveals the following activities.

The cost driver volume for each product was as follows

Instructions

(a) Determine the overhead rate for each activity.

(b) Assign the manufacturing overhead costs for April to the two products using activity based costing.

(c) Write a memorandum to the president of Fribourg Instrument explaining the benefits of activity-based costing.

Transcribed Image Text:

Activity 1. Materials handling 2. Machine setups 3. Quality inspections Cost Driver Number of requisitions Number of setups Total Cost $35,000 27,000 Number of inspections 27,000