Activity Based Costing Second Stage Allocation Example The firm produces two products, X and Y. 20,000 units of X are produced each year. 30,000 units of Y are produced each year There are many activity centers including the setup activity center. 200 setups are used in the production of X. 600 setups are used in the production of Y $80,000 of setup costs are incurred. The number of setups is the allocation base for setup costs. Questions I. What is the predetermined overhead rate (activity rate) for the setup activity center? 2. Determine the total amount of setup costs allocated to product X 3. Determine the setup cost per unit of product X