Exercise 18-4 Altex 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	39,500	9,000
Direct labor hours per wheel	1	3

Total estimated overhead costs for the two product lines are $780,000.

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. (Round answers to 0 decimal places, e.g. 1,575.)

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	Expected Use of Cost Drivers	Estimated Overhead Costs
Setting up machines	1,000	setups	$233,000
Assembling	66,500	labor hours	267,000
Inspection	1,200	inspections	280,000

Compute the activity-based overhead rates for these three cost pools. (Round answers to 2 decimal places, e.g. 12.25.)

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. (Round answers to 0 decimal places, e.g. 1,575.)

Expected Use of Cost Drivers per Product
Car	Truck
Number of setups	200	800
Direct labor hours	39,500	27,000
Number of inspections	100	1,100

Car Wheels	Truck Wheels
Setting up machines	$	$
Assembling	$	$
Inspection	$	$
Total cost assigned	$	$