Sleep Corporation manufactures mattresses including Spring, Foam and Tempur Pedic. Sleep Corporation has four activities in its manufacturing process: Cutting, Stitching, Inspection and Packing. The following information is available:

Activity Cost Pool Estimated Overhead Expected Use of Cost Driver

Per Activity

Cutting $1,000,000 50,000 labour hours

Stitching $2,000,000 25,000 machine hours

Inspections $50,000 2,000 times

Packing $900,000 3,500 finished goods units Spring	Foam	Tempur	Total
Cutting	25,000	15,000	10,000	50,000 labour hours
Stitching	15000	5000	5000	25,000 machine hours
Inspections	1500	250	250	2000 times
Packing	3,000	300	200	3,500 units

Instructions

Perform the following analyses of overhead for these two components:

a) Calculate MOH cost for each product line using a single overhead rate based on total machine hours

b) Calculate MOH cost for each product line using activity-based costing.