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.

Car Truck

Estimated wheels produced 35,000 9,000

Direct labor hours per wheel 1 3

Total estimated overhead costs for the two product lines are $657,200.

Calculate overhead rate.(Round answer to 2 decimal places, e.g. 12.25.)

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 allocate 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.

Activity Cost Pools Estimated Use of Cost Drivers Estimated Overhead Costs

Setting up machines 1,000setups $ 186,000

Assembling 62,000labor hours 248,000

Inspection 1,200inspections 223,200

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

Overhead Rates

Setting up machines $

Assembling $

Inspection $

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

Estimated Use of Cost Drivers per Product

Car Truck

Number of setups 200 800

Direct labor hours 35,000 27,000

Number of inspections 100 1,100

Car Wheels Truck Wheels

Setting up machines $ $

Assembling $ $

Inspection $ $

Total cost assigned $ $