Problem 1: Activity-Based Costing

Mountaineer Tents manufactures and sells heavy and light duty tents to various outdoor retailers. To better estimate costs, the company recently adopted an activity-based costing (ABC) system. The company estimates it will incur $900,000 in manufacturing overhead costs in the upcoming year. Based on an intense study of their company, the following activities, allocation bases, and percentages of overhead costs were determined:

Activity	Allocation Base	Proportion of Overhead Cost
Purchasing	Number of purchase orders	55%
Inspections	Number of inspections	20%
Sales	Number of sales orders	25%

The estimated number of activities for heavy and light duty tents is expected to be as follows:

	Heavy-duty		Light-duty
Number of purchase orders	5,000		4,000
Number of inspections	3,000		1,000
Number of sales orders	800		400

Required:

A.	Calculate the amount of overhead that should be allocated to each of the three activities.
B.	Calculate the overhead rates for each of the three activities.
C.	If a single sales order requires 10 purchase orders and 30 inspections to fill, how much overhead should be applied to the order?

Just checking my work. Thanks!