Maryville Manufacturing designs and builds custom mudroom storage benches.All of the mudroom storage benches are constructed with rustic hickory.Its budgeted manufacturing costs for the 2018 year are as follows.

Overhead cost pools

Purchasing | $45,000

Handling Materials | $50,000

Production | $130,000

machine setup | $85,000

Inspecting | $60,000

Inventory control | $80,000

Utilities | $100,000

Total budgeted overhead costs |$550,000

For the last 5 years, Maryville Manufacturing has been charging overhead to products on the basis of materials cost.For the year 2018, materials cost of $500,000 were budgeted.

Jim Johnson, owner-manager of Maryville Manufacturing, recently directed his accountant, Ledger Kaufman, to implement the activity-based costing system that he has repeatedly proposed.At Jim's request, Ledger and the production foreman identify the following cost drivers and their usage for the previously budgeted overhead cost pools.

Overhead Cost Pools |Activity Cost Drivers|Expected Use of Drivers

Purchasing|# of orders |500

Handling materials|# of moves |5,000

Production |Direct labor hrs|65,000

Setting up machines|# of setups |1,000

Inspecting|# of inspections|4,000

Inventory control |# of components |40,000

Utilities|Square ft occupied|50,000

Utilities|Square ft occupied|50,000

Doug Russell, sales manager, has received an order for 12 custom mudroom storage benches from Homes by Kathy.At Doug's request, Ledger prepares costs estimates for producing 12 mudroom storage benches so Doug can submit a contract price per mudroom storage bench to Homes by Kathy.He accumulates the following data for the production of 12 mudroom storage benches.

Direct materials|$5,200

Direct labor |$3,500

Direct labor hours|200

Number of purchase orders|3

Number of material moves|32

Number of machine setups|4

Number of inspections |20

Number of components|640

Number of square feet occupied|320

Required:

1.Compute the predetermined overhead rate using traditional costing with direct materials cost as the allocation base.