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Dolan Tires manufactures tires for dune buggies and has two different products, nubby tires and smooth tires. The company produces 5,000 nubby tires and 10,000 smooth tires each year and incurs $249,300 of overhead costs. The following information is available:

Activity Total Cost Cost Driver

Materials handling $112,500 Number of requisitions

Machine setups $63,000 Number of setups

Quality inspections $73,800 Number of inspections

For the nubby tires, the company has 700 requisitions, 200 setups, and 500 inspections. The smooth tires require 800 requisitions, 400 setups, and 400 inspections.

Instructions

Determine the overhead rate for each activity.

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