A manufacturing plant produces two products: Product A and Product B. The following data is available:

• Total overhead costs: $250,000
• Activity cost pools and cost drivers:
  • Setup activities: Number of setups
  • Machine processing: Machine hours
  • Quality control: Number of inspections
• Activity levels:
  • Setup activities: 150 setups
  • Machine processing: 7,000 machine hours for Product A, 5,000 machine hours for Product B
  • Quality control: 300 inspections

a. Calculate the activity rates for each activity cost pool. b. Assign overhead costs to each product using ABC. c. Discuss how ABC can improve the accuracy of product costing and profitability analysis.