After reading an article about activity-based costing in a trade journal for the furniture industry, Santana Rey wondered if it was time to critically analyze overhead costs at Business Solutions. In a recent month, Santana found that setup costs, inspection costs, and utility costs made up most of its overhead. Additional information about overhead follows. Activity Cost Driver Setting up machines $20,000 25 batches Inspecting components $ 7,500 5,000 parts Providing utilities $10,000 5,000 machine hours Overhead has been applied to output at a rate of 50% of direct labor costs. The following data pertain to Job 615. 1 Direct materials Direct labor Batches Number of parts Machine hours $2,500 $3,500 2 batches 400 parts 600 machine hours cos Required: 1. Classify each of its three overhead activities as unit level, batch level, product level, or facility level. Setting up machines Inspecting components Providing utilities Print 2. What is the total cost of Job 615 if Business Solutions applies overhead at 50% of direct labor cost? References Total cost 3. What is the total cost of Job 615 if Business Solutions uses activity-based costing? Total manufacturing cost Xie Company identified the following activities, costs, and activity drivers for this year. The company manufactures two types of go- karts: Deluxe and Basic Activity Handling materials Inspecting product Processing purchase orders Paying suppliers Insuring the factory Designing packaging Expected Costs $625,000 900,000 105,000 175,000 300,000 75,000 Expected Activity 100,000 parts 1.500 batches 700 orders 500 invoices 40,000 square feet 2 models 5 ances Required: Compute the activity rate for each activity, assuming the company uses activity based costing. (Round activity rate answers to 2 decimal places.) Activity Expected Costs Activity Driver Activity Rate Handling materal $ 625.000 100,000 parts Inspecting product 900,000 1,500 batches Processing orders 105,000 700 orders Paying suppliers 175,000 500 invoices Insuring factory 300,000 40,000 square foot Designing packaging 75,000 2 models $ 2,180,000