Sheridan Inc. manufactures two products: car wheels and truck wheels. To determine the amount of overhead to assign to each product line, the controller, Steven Garcia, has developed the following information: Car Truck Estimated wheels produced 40,000 19,000 Direct labour hours per wheel 4 4 Total estimated overhead costs for the two product lines are $1,416,000. Calculate the overhead cost assigned to the car wheels and truck wheels, assuming that direct labour hours are used to allocate overhead costs. Car wheels Truck wheels Total overhead +A +A +A 960000 456000 1416000 Steven 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: Estimated Overhead Activity Cost Pools Costs Estimated Use of Cost Drivers Setting up machines $265,000 500 set-ups Assembling 296,000 37,000 labour hours Inspection 855,000 1,710 inspections Calculate the activity-based overhead rates for these three cost pools. Cost Pool Rate Setting up machines $ 530 per set-up Assembling $ per labour hour Inspection $ 500 per inspection 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 Truck Number of set-ups 200 300 Direct labour hours 20,900 16,100 Number of inspections 60 1,650 Car Overhead assigned $ $ Truck