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Coca-Cola Company allocates its overhead costs using activity-based costing. The company has identified two activity cost pools and allocation bases: Activity: Production Line Setup Total

Coca-Cola Company allocates its overhead costs using activity-based costing. The company has identified two activity cost pools and allocation bases:

  • Activity: Production Line Setup
    • Total Cost: $10 million
    • Allocation Base: Number of Production Line Setup Hours
    • Total Setup Hours: 5,000
  • Activity: Quality Control Inspections
    • Total Cost: $15 million
    • Allocation Base: Number of Inspections Conducted
    • Total Inspections: 20,000

Requirements:

  1. Calculate the overhead cost allocation rate for production line setup.
  2. Determine the overhead cost allocation rate for quality control.
  3. Allocate the overhead costs to two product lines based on the following usage:
    • Product Line X: 3,000 setup hours, 8,000 quality control inspections
    • Product Line Y: 2,000 setup hours, 12,000 quality control inspections

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