Hayward Industries manufactures dining chairs and tables. The following information is available:

Dining Chairs Tables Total Cost

Machine setups 200 600 $48,000

Inspections 250 470 $72,000

Labour hours 2,600 2,400

Hayward is considering switching from one overhead rate based on labour hours to activity-based costing.

Required:

Perform the following analyses for these two components of overhead:

a) Compute total machine setups and inspection costs assigned to each product, using a single overhead rate (Labour Hours).

b) Compute total machine setups and inspection costs assigned to each product, using activity-based costing.

c) Comment on your findings.