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Altex Inc. manufactures two products: car wheels and truck wheels. To determine the amount of manufacturing overhead to assign to each product line, the
Altex Inc. manufactures two products: car wheels and truck wheels. To determine the amount of manufacturing overhead to assign to each product line, the controller has developed the following information: Total estimated overhead costs for the two product lines are $770,000. Activity Cost Pools Setting up machines Assembling Inspection Required Expected Use of Cost Drivers 1,000 setups 70,000 labor hours 1,200 inspections Estimated Overhead Costs $220,000 $280,000 $270,000 (a) Compute the activity-based overhead rates for the three cost pools. (b) Compute the MOH cost that is assigned to the car wheels and truck product lines using an activity-based costing system, given the following Information: Expected Use of Cost Drivers per Product Car Wheels 200 Number of setups Direct labor hours 40,000 Number of inspections 100 1,100 Truck Wheels 800 30,000
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