Activity based coasting

Question Three Airspace, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 60 range instruments and 400 pressure gauges were produced, and overhead costs of 101,600 OMR were estimated. An analysis of estimated overhead costs reveals the following activities. Activities Materials handling Machine setups Quality inspections Total cost Cost Drivers Number of requisitions Number of setups Number of inspections Total Cost in OMR 42.000 24,600 35.000 101,600 Gauges The cost driver volume for each product was as follows. Cost Drivers Instruments Number of requisitions 450 Number of setups 200 Number of inspections 250 4 00 450 Total 1.000 600 700 T a. Determine the overhead rate for each activity (1 mark) b. Assign the manufacturing overhead costs for April to the two products using activity-based costing. (2 marks) c. Write a memorandum to the president of Air United explaining the benefits of activity- based costing. (2 marks) Total: 5 marks