E4-4B Portland Inc. manufactures two products: car wheels and truck determine the amount of overhead to assign to each pro Tonet has developed the following information. a C t of overhead to assign to each product line, the controller Marie Car Estimated wheels p Direct labor hours per wheel Truck 40,000 10,000 roduced al estimated overhead costs for the two product lines are $840,000. Instructions (a) Compute the overhead cost assigned to the car wheels and truck wheels, assuming that direct labor hours is used to allocate overhead costs. Tonet is not satisfied with the traditional method of allocating overhead becauses she believes that most of the overhead costs relate to the truck wheel product line because of its complexity. She therefore develops the following three activity cost related cost drivers to better understand these costs. (b) pools and Expected Use of Estimated Overhead Activity Cost PoolsCost Drivers Setting up machines Assembling Inspection $260,000 280,000 300,000 500 setups 35,000 labor hours 600 inspections Compute the activity-based overhead rates for these three cost pools. (c) Compute the cost that is assigned to the car wheels and truck product lines using an activity-based costing system, given the following information. Expected Use of Cost Drivers per Product Car Truck 400 Number of setups Direct labor hours Number of inspections 20,000 50 15,000 550 (d) What do you believe Tonet should do