Harmony Audio Inc. manufactures two products: receivers and CD players. The factory overhead incurred is as follows:

Indirect labor $210,000

Subassembly Dept 145,000

Final Assembly Dept 95,000

Total $450,000

The activity base associated with the two production departments is direct labor hours. The indirect labor can be assigned to two different activities as follows:

Activity Activity Cost Pool Activity Base Setup $90,000 Number of setups Quality control 120,000 Number of inspections Total $210,000

The activity-base usage quantities and units produced for the two products are shown below.

Number of Setups Number of Inspections Direct Labor Hours-Subassembly Direct Labor Hours-Final Assembly Units produced

Receivers 200 1,000 600 400 5,000 CD players 40 250 400 600 5,000 Total 240 1250 1,000 1,000 10,000

1. Determine the factory overhead rates under the multiple production department rate method. Assume that indirect labor is associated with the production departments, so that the total factory overhead is $250,000 and $200,000 for the Subassembly and Final Assembly departments, respectively.

2. Determine the total and per-unit factory overhead costs allocated to each product, using the multiple production department overhead rates in (1).

3. Determine the activity rates, assuming that the indirect labor is associated with activities rather than with the production departments.

4. Determine the total and per-unit cost assigned to each product under activity-based costing.

5. Explain the difference in the per-unit overhead allocated to each product under the multiple production department factory overhead rate method and activity-based costing methods.