Eason Company manufactures wheel rims. The controller budgeted the following ABC allocation rates for 2009 :

The number of parts is now a feasible allocation base because Eason recently purchased bar coding technology. Eason produces two wheel rim models: standard and deluxe. Budgeted data for 2009 are as follows:

The company's managers expect to produce 1,000 units of each model during the year.

Requirements 

1. Compute the total budgeted indirect manufacturing cost for 2009.

2. Compute the \(\mathrm{ABC}\) indirect manufacturing cost per unit of each model. Carry each cost to the nearest cent.

3. Prior to 2009 , Eason used a direct labor hour single-allocation-base system. Compute the (single) allocation rate based on direct labor hours for 2009. Use this rate to determine the indirect manufacturing cost per wheel rim for each model, to the nearest cent. 

Transcribed Image Text:

Activity Materials handling Machine setup Insertion of parts Finishing Number of setups Allocation Base Number of parts Cost Allocation Rate $ 3.00 per part 300.00 per setup Number of parts 24.00 per part Finishing direct labor hours 50.00 per hour