Crane 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. Estimated wheels produced Direct labor hours per wheel (a1) (a2) (b) Activity Cost Pools Setting up machines Assembling Inspection Total estimated overhead costs for the two product lines are $837,400. Setting up machines Car Assembling 43,000 Inspection 1 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. Truck $ 12,000 Estimated Use of Cost Drivers 1,000 setups 79,000 labor hours Overhead Rates 3 1,200 inspections Compute the activity-based overhead rates for these three cost pools. Estimated Overhead 11 Costs $237,0 316,000 284,400

Crane inc. manufactures two products: car wheels and truck whech. To determine the amount of overhead to assign to each product line, the controller, Robert Hermann has developed the following information Total estimated overhead costs for the two product lines are $837,400. (a1) (b) Hermunn is not satisfied with the traditional method of allocating overhead because he believer that most of the overhead costs relate to the truck whieels product line because of its compleoty. He therefore develops the following three activity cost pools and related cost drivers to better understand these costs. Compute the activity-based overhead rates for these three cost pools