Altex Inc. manufactures two products: car wheels and truck wheels. To determine the amount of overhead to assign to each product line, the controller, Robert Hermann, has developed the following information.

		Car		Truck
Estimated wheels produced		43,000		12,000
Direct labor hours per wheel		1		3

Total estimated overhead costs for the two product lines are $837,400.

(a1)

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Your answer is correct.

Calculate overhead rate. (Round answer to 2 decimal places, e.g. 12.25.)

Overhead rate

$enter the overhead rate per direct labor hour in dollars rounded to 2 decimal places

per direct labor hour

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Attempts: 1 of 5 used

(a2)

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Your answer is correct.

Compute the overhead cost assigned to the car wheels and truck wheels, assuming that direct labor hours is used to assign overhead costs.

Car wheels		$enter a dollar amount
Truck wheels		$enter a dollar amount

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Attempts: 3 of 5 used

(b)

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Your answer is correct.

Hermann is not satisfied with the traditional method of allocating overhead because he believes that most of the overhead costs relate to the truck wheels product line because of its complexity. He therefore develops the following three activity cost pools and related cost drivers to better understand these costs.

Activity Cost Pools		Estimated Overhead Costs			Estimated Use of Cost Drivers
Setting up machines		$237,000			1,000	setups
Assembling		316,000			79,000	labor hours
Inspection		284,400			1,200	inspections

Compute the activity-based overhead rates for these three cost pools.

		Overhead Rates
Setting up machines		$enter a dollar amount per setup	/setup
Assembling		$enter a dollar amount per direct labor hour	/DLH
Inspection		$enter a dollar amount per inspection	/inspection

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Attempts: 4 of 5 used

(c)

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Your answer is incorrect.

Compute the cost that is assigned to the car wheels and truck wheels product lines using an activity-based costing system, given the following information.

Use of Cost Drivers per Product
		Car		Truck
Number of setups		200		800
Direct labor hours		43,000		36,000
Number of inspections		100		1,100

		Car Wheels		Truck Wheels
Setting up machines		$enter a dollar amount		$enter a dollar amount
Assembling		$enter a dollar amount		$enter a dollar amount
Inspection		$enter a dollar amount		$enter a dollar amount
Total cost assigned		$enter a total amount		$enter a total amount