Q E5.20 (LO 1, 2) Excel Alonzo Inc. manufactures two products: car wheels and truck wheels. To determine the amount of overhead to assign to each product line, the controller, YuYu Ortega, has developed the following information: Car Truck 40,000 10,000 6 Estimated wheels produced Direct labour hours per wheel Total estimated overhead costs for the two product lines are $840,000. Instructions a. Calculate the overhead cost assigned to the car wheels and truck wheels, assuming that direct labour hours are used to allocate overhead costs. b. YuYu is not satisfied with the traditional method of allocating overlead because he believes that most of the overhead costs relate to the truck wheel product line because of its complexity. He therefore develops the following three activity cost pools and related cost drivers to better understand these costs: Activity Cost Pools. Estimated Overhead Costs Setting up machines Assembling Inspection $260,000 280,000 300,000 Number of set-ups Direct labour hours Number of inspections 2 Estimated Use of Cost Drivers 500 set-ups 35,000 labour hours i 600 inspections Calculate the activity-based overhead rates for these three cost pools. c. Calculate the cost that is assigned to the car and truck product lines using an activity-based costing system, given the following information: Use of Cost Drivers per Product Car 100 20,000 50 Truck 400 15,000 550 AA P