Simba Corporation manufactures three products. In the past, Simba has been using a traditional costing system in which manufacturing overhead was applied using a predetermined overhead rate of 150% of direct labor cost. Sensing the traditional costing system was distorting product costs; Simba is considering a switch t o an activity - based costing system . Under activity - based costing, manufacturing overhead costs will be assigned to products using three activity cost pools. Information on these cost pools for next year is as follows:

	Activity Cost Pool	E xpected Activity	Estimated Overhead Cost
	Machine Setups	400	S etups
$	150,000 Qualit y	Cont r	o l 1,500 In s
p	ections $1 8	0,000	Production 30 ,

0

00 Machine hours $480,000 Info r mation o n a per unit ba sis for the three products

p	r	oduced by	Simba fol l	ows: Mo d
e	l #19 Model #36 Mode l #58 Direct materia l	cost	.... .	.... .
.	......... $400 $ 5 40 $310 Direct labor cos t	.... .	.... .	.... .
.	......... $810 $ 600 $220 Number of set u p	s	. .	. .
.	.................. 2 3 1 Number of i n	s p	e c	t i
o	ns ............... 1 3 1 Number o f	m	a c	hi n

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