Activity-Based Costing Problem GIVEN: Automotive Products designs and produces automotive parts. In 201i, actual manufacturing overhead was $308,000. The company's simple costing system allocates variable manufacturing overhead to its two customers Western Motors and Carlson based on machine hours. The company prices its contracts on full costs One of its customers complains of being overcharged, so the company's controller wishes to examine the company's overhead resources more thoroughly There are three main departments: Design, Production, and Engineering The following data is noted by the controller Total Hours 34,200 200 hours 250 hours 450 hrs 2017 Variable Western Motors Department Cost Driver MOH Motors hours Production Machine-hours $ 252,000 2000 hours-13,600houry 5,600 hrs 21,800 1140 hours 308,000 160 hours REQUIRED: 1) Calculate the Variable Manufacturing overhead rate based on machine-hours (to determine the simple MOH rate). 2) Determine the Variable MOH costs for each of Automotive Products customers, that is for Western Motors and Carlson Motors, using the simple MOH rate. 3) Determine the total Variable MOH costs allocated to each customer using the three departmental overhead rates. (HINT: You first need to determine each department MOH rate and then multiply by the number of respective hours.) 4) Explain your findings. Was Western Motors or Carlson Motors overcharged based on using. only the simple costing system? 7 To ta arlsan Motors o Perh l 2. 96 Prelb wedin S 2,000 -h -hr