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Frederick, Inc. uses activity-based costing to account for its chrome bumper manufacturing process. Company managers have identified four manufacturing activities: materials handling, machine setup,
Frederick, Inc. uses activity-based costing to account for its chrome bumper manufacturing process. Company managers have identified four manufacturing activities: materials handling, machine setup, insertion of parts, and finishing. The budgeted activity costs for the year and their allocation bases are as follows: Requirement 1. Compute the predetermined overhead allocation rate for each activity. Begin by selecting the formula to calculate the predetermined overhead (OH) allocation rate. Then enter the amounts to compute the allocation rate for each activity. (Round your answers to the nearest cent.) Predetermined OH allocation rate Data table Activity Total Budgeted Cost Allocation Base Materials handling $ Machine setup Insertion of parts 6,000 Number of parts 3,600 Number of setups 51,000 Number of parts 90,000 Finishing Finishing direct labor hours $ 150,600 Total Frederick expects to produce 500 chrome bumpers during the year. The bumpers are expected to use 4,000 parts, require 10 setups, and consume 1,200 hours of finishing time. Requirements 1. Compute the predetermined overhead allocation rate for each activity. 2. Job 86 required the production of 120 bumpers and required one setup. Compute the indirect manufacturing cost allocated to Job 86.
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