P$3.$ Coyote Inc. manufactures two products: regular tires and snow tires. To determine the amount of overhead assigned to each product line, the controller, Robert Hermann, has developed the following information.

a$.$ Assign overhead using traditional costing.

$\backslash$table$[[,$Regular,Snow$],[$Estimated tires produced,$60,000,10,000],[$Machine hours per tire,$2,3]]$

Total estimated overhead costs for the two product lines are $$900,000.$

Instructions $1$: Compute the overhead cost assigned to the regular tires and snow tires, assuming that the machine hour is used to assign overhead costs.

b$.$ Hermann is not satisfied with the traditional method of allocating overhead because he believes that most of the overhead costs relate to the snow tires product line because of its complexity. He$,$ therefore, develops the following three activity cost pools and related cost drivers to better understand these costs.

$\backslash$table$[[,\backslash$table$[[$Estimated Use of$],[$Activity Cost Pools$]],\backslash$table$[[$Estimated Overhead$],[$Costs$]]],[$Setting up machines,$500$ setups,$$300,000$