Estimated Use of Cost Drivers per Product Car Truck Number of setups 200 800 Direct labor hours 36,000 36,000 Number of inspections 100 1.100 Car Wheels Truck Wheels Setting up machines $ Assembling $ $ Inspection $ $ Total cost assigned $ $ 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. Estimated Overhead Costs Activity Cost Pools Setting up machines Assembling Inspection Estimated Use of Cost Drivers 1,000 Setups 72.000 labor hours 1.200 inspections $216.000 288,000 259,200 Compute the activity-based overhead rates for these three cost pools. Overhead Rates Setting up machines $ 216 Assembling $ 4 Inspection $ 216 Vaughn 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 36,000 12.000 Estimated wheels produced Direct labor hours per wheel 1 3 Total estimated overhead costs for the two product lines are $763,200. Calculate overhead rate. (Round answer to 2 decimal places, es. 12.25) Overhead rates 10.60 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 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 $ 417.600 Truck wheels $ 382.800