20,000 assign to each product line, the two products: car wheals and truck wheels. To determine theamr controller, Robert Hermann, has developed the follown Estimated wheels produced Direct labor hours per wheel Car 40,000 Truck 10,000 3 Total estimate d overhead costs for the two product lines are $770,000. Instructions (a) Compute the overhead cost assigned to the car wheels and truck wheels, a assuming that direct labor hours he believes that most is used to allocate overhead costs. (b) Hermann is not satisfied with the traditional method of allocating overhead beca of the overhead costs relate to the truck whe the following three activity cost pools and related cost drivers to better unders els product line because of its complexity. He therefore develops Expected Use of Cost Drivers 1,000 setups 70,000 labor hours 1,200 inspections Estimated Overhead Activity Cost Pools Setting up machines Assembling Inspection Costs $220,000 280,000 270,000 Compute the activity-based overhead rates for these three cost pools. Compute the cost that is assigned to the car wheels and truck wheels product lines using an a costing system, given the following information. (c) Expected Use of Cost Drivers per Product Car Truck Number of setups Direct labor hours Number of inspections 200 40,000 100 800 30,000 1,100 (d) What do you believe Hermann should dot? NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a Cost Data-Tricycles 5 6.125 (a) Direct labor hours for car wheels Direct labor hours for truck wheels Total Direct labor hours Value Value stal uoits Total estimated overhead Total direct labor hours Value Value / units OH rate/DLH Overhead assigned rwhees Truck wheels Direct labor hours Overhead rate / direct labor hour Total OH assigned ABC OH Rate Expected Use (b) Activity Cost Pool Setting up machines Assembling Inspection Estimated OH + o Cost Drivers setup labor hour Value Value Value Value Value Value inspection Car Wheels Cost Expected Use of ABC OH Rates = Value Value Value - Assigned Cost Driver/Unit x Activity Cost Pool Setting up machines Assembling Inspection Total cost assigned Value Value Value