Question 3 Eric Parker has been studying his department's profitability reports for the past six months. He has just completed a managerial accounting course and is beginning to questlon the company's approach to allocating overhead to products based on machine hours. The current department overhead budget of $760,500 is based on 34,000 machine hours. In an initial analysis of overhead costs, Eric Parker has identified the following activity cost pools Cost Pool Product assembly Machine setup and calibration Product inspection Raw materials storage Expected Cost Expected Activities $272,000 225,000 126,000 137,500 $760,500 34,000 Machine hours 1,500 setups 1,800 batches 550,000 pounds Eric Parker is taking the next step in his exploration of activity-based costing and wants to examine the overhead costs that would be allocated to two of the department's four products. He has gathered the following budget Information about each product. Component 3F5 Component Driver Usage Machine hours Setups Batches Pounds of raw materials T76 800 40 15 10,000 12,000 17 10 10,000