$3.$ Gurdy$$s production manager has suggested using activity$-$based instead of either the traditional or departmental approaches. To facilitate the necessary calculations, she assigned the company$$s total manufacturing overhead cost to its five activity cost pools as follows:

Activity Cost Pool Activity Measure Manufacturing Overhead

Machining Machine hours in Molding $$467,500$

Assemble and Pack Direct labor hours in Assemble and Pack $282,500$

Order processing Number of customer orders $280,000$

Setups Setup hours $390,000$

Other $130,000$

Total overhead $$1,550,000$

She also determined that the average order size for the Basic and Advanced models is $400$ units and $50$ units, respectively. The molding machines require a setup for each order. One set hour is required for each customer order of the Basic model and three hours are required to setup for an order of the Advanced model.

The company pays a sales commission of $5\%$ for the Basic model and $10\%$ for the Advanced model. Its traceable fixed costs include $$150,000$ for the Basic model and $$200,000$ for the Advanced model. The remainder of the company$$s selling and administrative costs are organization$-$sustaining in nature.

Using the additional information provided by the production manager, calculate:

a$.$ An activity rate for each activity cost pool

b$.$ The total manufacturing overhead cost allocated to the Basic model and the Advanced model using the activity$-$based approach.

c$.$ The total selling and administrative cost allocated to the basic model and the Advanced model using the activity$-$based approach.

Molding Assemble and Pack Total

Manufacturing overhead costs $$997,500$ $$552,500$ $$1,550,000$

Direct labor hours:

Basic $10,00020,00030,000$

Advanced $10,00010,00020,000$

Machine hours:

Basic $15,000-15,000$

Advanced $10,000-10,000$