Sandhill Inc. manufactures two products: car wheels and truck wheels. To determine the amount of overhead to assign to each product line, the controller, Thomas Taylor, has developed the following information:

Total estimated overhead costs for the two product lines are $1,030,000.

Thomas is not satisfied with the traditional method of allocating overhead 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:

Calculate the activity-based overhead rates for these three cost pools.

Car Truck 14.000 Estimated wheels produced Direct labour hours per wheel 47.000 2 8 Activity Cost Pools Setting up machines Assembling Inspection Estimated Overhead Costs $318,000 370,000 342,000 Estimated Use of Cost Drivers 600 set-ups 37,000 labour hours 684 inspections Rate Cost Pool Setting up machines $ per set-up Assembling $ per labour hour Inspection $ per inspection