A firm manufactures a product that undergoes a manufacturing process involving 5 cost driver activities. These activities, their estimated costs, and the expected and actual activity levels are shown below

	Estimated indirect cost	Expected activity (vol. of allocation base)	Actual activity (cost driver units)
Engineering	$360,000	1,000 engineering hrs.	1050 engineering hrs.
Set ups	$45,000	200 set ups	160 set ups
Production safety	$15,000	7,000 inspections	6500 inspections
Materials handling	$15,000	8,000 parts	7200 parts
Quality control	$15,000	7,000 inspections	6500 inspections
TOTAL	$450,000

Part I: Assume overhead is applied to products using the traditional method, on the basis of a single activity, which is engineering.

1. Compute the single-activity overhead cost allocation rate. HINT: Ch. 3 Powerpoint, slide 27 (2 points)
2. Compute the assignment of overhead cost to the product using the allocation rate you computed in step a), and appropriate activity level data. HINT: Ch. 3 Powerpoint, slide 21 (2 points)

Part II: Assume overhead is applied to products using the ABC (activity based costing method), on the basis of all 5 cost-driver single activities.

1. Compute the overhead cost allocation rates for each of the 5 activites. HINT: Ch. 3 Powerpoint, slide 27, in the slide's example the rates are already given, but for this HW case, you will need to compute them yourself. (3 points)
2. Compute the assignment of overhead cost to the product using the allocation rates you computed in step a) and appropriate activity level data. HINT: Ch. 3 Powerpoint, slide 21 and slide 31 (3 pts.)

TOTAL 10 points