HW Problem # 2 Alonzo, Inc makes three products: car wheels, truck wheels, and trailer wheels. To determine the amount of OH to assign to each product line, the controller has developed the following information: Est wheels produced DLH per wheel Car 40,000 Truck 10,000 Trailer 22,000 Total estimated OH costs for the three product lines is $876,000. The following information was also developed when the company decided to consider using ABC to allocate OH. Activity Cost Pools Set up machines Assembly Inspection Expected Use of Cost Drivers 1,000 setups 114,000 DLH 1,200 inspections Total Est OH Costs $180,000 $456,000 S240,000 The actual usage by the three products is as follows: # of setups DLH # of inspections Car 190 38,000 350 Truck 685 31,000 450 Trailer 120 42,500 400 Required: 1. Calculate the predetermined OH rate if the company uses a single rate to allocate all OH based on the number of units produced. Then, apply the OH to each product line. Allocate OH to the three product lines based on ABC principles. Explain what caused the differences between your answer in #1 and #2 above, which method would you choose to allocate OH and why? 2. 3