A4 A B Jx Several years after reengineering its production process, Dettling Corpor 1 Activity-Based Costing, Lean Operations, and the Costs of Quality 2 Use ABC to allocate manufacturing overhead 3 D E Several years after reengineering its production process, Dettling Corporation hired a new controller, Alana Metzgar. She developed an ABC system very similar to the one used by Dettling's chief rival. Part of the reason Metzgar developed the ABC system was because Dettling's profits had been declining, even though the company had shifted its product mix toward the product that had appeared most profitable under the old system. Before adopting the new ABC system, the company had used a plantwide overhead rate based off 4 direct labor hours that was developed years ago. 5 6 For the upcoming year, Dettling's budgeted ABC manufacturing overhead allocation rates are as follows: 7 Activity Cost Allocation Rate 8 9 10 11 23 13 12 Activity Materials handling Machine setup Insertion of parts Finishing Allocation Base Number of parts $ 4.50 per part Number of setups $ 325.00 per setup Number of parts $ 31.00 per part Finishing direct labor hours $ 51.00 per hour H