Exercise 17-04 al-a2, b-c (Video) Sunland 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 42,000 11.000 Estimated wheels produced Direct labor hours per wheel Total estimated overhead costs for the two product lines are $870,000. Calculate overhead rate. (Round answer to 2 decimal places, e.g. 12.25.) Overhead rate per direct labor hour LINK TO TEXT VIDEO SIMILAR EXERCISE 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 LINK TO TEXT VIDEO SIMILAR EXERCISE 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 Setting up machines Assembling Inspection Estimated Use of Cost Drivers 1,000 setups 75,000 labor hours 1,200 inspections Estimated Overhead Costs $225,000 375,000 270.000 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 42,000 33,000 Number of inspections 100 1,100 Car Wheels Truck Wheels Setting up machines Assembling Inspection Total cost assigned