Cover page Question 1 Question 2 FORMULA Inspection 1,200 inspections $270,000 Data relating to an activity-based costing system: Expected use of Cost Drivers per Product Car Truck Number of setups 200 800 Direct labour hours 40,000 30,000 Number of inspections 100 1,100 Required: 1 Compute the overhead cost assigned to the car wheels and truck wheels, assuming that direct labor hours are used to allocate overhead costs. (6 marks) Working Answer Direct labor hours for car wheels Direct labor hours for truck wheels Total direct labor hours Formula Working Answer Working: Overhead rate per Direct Labour hours Overhead Assigned Working Answer Car Wheels Truck Wheels Total Over head 2 Compute the activity-based overhead rates for the three cost pools. (3 marks) Activity Cost Pool Estimated Overhead Estimated use of Cost drivers Overhead rate Setting up Machines Assembling Inspection 3 Compute the cost that is assigned to the two products using activity-based costing. (13 marks) Car Wheels Activity Cost Pools Expected Use of Cost Driver per Activity-based overhead Product rates Cost Assigned Setting up Machines Assembling Inspection Truck Wheels Activity Cost Pools Expected Use of Cost Driver per Activity-based overhead Product rates Cost Assigned Setting up Machines Assembling Inspection