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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

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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 41,000 10,000 Estimated wheels produced Direct labor hours per wheel 1 3 Total estimated overhead costs for the two product lines are $752,600 Calculate overhead rate. (Round answer to 2 decimal places, e.g. 12.25) Overhead rate $ per direct labor hour 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. Estimated Overhead Estimated Use of Activity Cost Pools Costs Cost Drivers Setting up machines $213,000 1,000 Setups Assembling 284,000 71,000 labor hours Inspection 255,600 1.200 Inspections Compute the activity-based overhead rates for these three cost pools, Overhead Rates Setting up machines $ /setup $ /DLH Assembling Inspection /inspection

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