Altima Inc. manufactures two products: car wheels and truck wheels. To determine the amount of overhead to assign to each product line, the controller, Rashid Al Harrasi, has developed the following information: Car Truck Estimated wheels produced 40,000 10,000 Direct labor hours per wheel 1 Total estimated overhead costs for the two product lines are $770,000 Rashid 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 Use of Estimated Overhead Cost Drivers Costs Setting up machines 1,000 setups $220,000 Assembling 70,000 labor hours 280,000 Inspection 1,200 inspections 270,000 Estimated Use of Cost Drivers per Product Car Truck Number of setups 800 Direct labor hours 40,000 30,000 Number of inspections 1,100 200 100 Instructions a. Compute the overhead cost assigned to the car wheels and truck wheels, assuming that direct labor hours is used to assign overhead costs. b. Compute the activity-based overhead rates for these three cost pools. c. Compute the cost that is assigned to the car wheels and truck wheels product lines using an activity based costing system