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Fontillas Instrument, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, it produced 50 range instruments and 300 pressure gauges and
Fontillas Instrument, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, it produced 50 range instruments and 300 pressure gauges and incurred estimated overhead costs of $94,560. An analysis of estimated overhead costs reveals the following activities: Activities 1. Material handling 2. Machine set-ups Cost Drivers Number of requisitions Number of set-ups Number of inspections Total Cost $33,300 28,320 32,940 $94,560 3. Quality inspections The cost driver volume for each product was as follows: Total Cost Drivers Number of requisitions Number of set-ups Number of inspections Instruments Gauges 460 650 150 330 210 400 1,110 480 610 Determine the overhead rate for each activity. The overhead rates are: Activity Cost Pool Rate Material handling 30 per requisition $ Machine set-ups 59 per set-up $ Inspections 54 per inspection Assign the manufacturing overhead costs for April to the two products using activity-based costing. Instruments Gauges Overhead cost per unit 679.8 201.9
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