Exercise 9-38 and 9-39 (Algo)

Upriver Parts manufactures two products, V-1 and V-2, at its River Plant. Selected data for an average month for the two products follow.

V-1V-2Units produced10,0001,000Direct materials cost per unit$2$4Machine hours per unit12Production runs per month8040

Production at the plant is automated and any labor cost is included in overhead. Data on manufacturing overhead at the plant follow.

Machine depreciation$96,000Setup labor42,000Material handling19,200Total$157,200

Exercise 9-38 (Algo) Activity-Based Costing and Cost Driver Rates (LO 9-4)

Required:

a.Upriver currently applies overhead on the basis of machine hours. What is the predetermined overhead rate for the month?(Round your answer to 2 decimal places.)

b.Upriver is thinking of adopting an ABC system. They have tentatively chosen the following cost drivers: machine hours for machine depreciation, production runs for setup labor, and direct material dollars for material handling. Compute the cost driver rates for the proposed system at Upriver.(Round "Machine depreciation" answer to 2 decimal places.)