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.

$\backslash$table$[[,$Car,Truck$],[$Estimated wheels produced,$36,000,11,000],[$Direct labor hours per wheel,$1,3]]$

Total estimated overhead costs for the two product lines are $$800,400.$

Overhead rate $$,$ per direct labor hour

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 $

Truck wheels

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.

$\backslash$table$[[$Activity Cost Pools,$\backslash$table$[[$Estimated$],[$Overhead$],[$Costs$]],\backslash$table$[[$Estimated Use of$],[$Cost Drivers$]]],[$Setting up machines,$$207,000,1,000$ setups$],[$Assembling$,345,000,69,000$ labor hours$],[$Inspection$,248,400,1,200$ inspections$]]$

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

Overhead Rates

Setting up machines

$

$/$setup

Assembling

$

$/$DLH

Inspection $ $/$inspection

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

$\backslash$table$[[$Use of Cost Drivers per Product,$],[,$Car,,Truck$],[$Number of setups,$200,800,],[$Direct labor hours,$36,000,,33,000],[$Number of inspections,$100,1,100,]]$

$\backslash$table$[[,$Car Wheels,Truck Wheels$],[$Setting up machines,$$,$$