Emory Company manufactures wheel rims. The controller expects the following ABC allocation rates for 2018:

Activity	Allocation Base	Predetermined Overhead Allocation Rate
Materials Handling	Number of parts	$ 7.00	per part
Machine Setup	Number of setups	$ 800.00	per setup
Insertion of Parts	Number of parts	$ 28.00	per part
Finishing	Number of finishing hours	$ 30.00	per hour

Emory produces two wheel rim models: standard and deluxe. Expected data for 2018 are as follows:

	Standard	Deluxe
Parts per rim	3.0	10.0
Setups per 500 rims	14.0	14.0
Finishing hours per rim	6.0	6.5
Total direct labor hours per rim	7.0	8.0

Requirement 1. Compute the total estimated indirect manufacturing cost for 2018.

Begin by selecting the formula to compute the total estimated overhead (OH) costs.

X

=

Total estimated overhead costs

Now compute the total estimated indirect manufacturing cost for 2018.

Activity	Total Estimated Indirect Manufacturing Cost
Materials handling
Machine setup
Insertion of parts
Finishing
Total Estimated Indirect Manufacturing Cost

Requirement 2. Prior to 2018, Emery used a single plantwide overhead allocation rate system with direct labor hours as the allocation base. Compute the predetermined overhead allocation rate based on direct labor hours for 2018. Use this rate to determine the estimated indirect manufacturing cost per wheel rim for each model, to the nearest cent.

First, write the formula, and then enter the amounts to compute the allocation rate.

	/		=	Allocation Rate
	/		=

Use the single plantwide allocation rate to determine the indirect manufacturing cost per wheel rim for each model, to the nearest cent.

Indirect manufacturing cost per rim:

Standard Model: ____________

Deluxe Model: ______________

Requirement 3. Compute the estimated ABC indirect manufacturing cost per unit of each model for 2018. Carry each cost to the nearest cent.

Compute the costs per unit for the standard model first, then the deluxe model. (Carry the setup cost per rim to three decimal places. Round your final answers to the nearest cent.)

	Allocated Mfg. OH Cost Per Rim	Allocated Mfg. OH Cost Per Rim
Activity	Standard	Deluxe
Materials handling
Machine setup
Insertion of parts
Finishing
Total cost per rim