Summit Manufacturing Company manufactures two products 24,000 units of Product #1 and 10,000 units of Product #2. The company uses a plantwide overhead rate based on direct labour-hours. It is considering implementing an activity-based costing (ABC) system that allocates all of its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products #1 and #2.

Activity Measure

Estimated Overhead Cost

Expected Activity

Machining

Machine-hours

$ 350,000

15,000 MH

Machine setups

Number of setups

$ 225,000

400 setups

Product design

Number of products

$ 16,000

2 products

General factory

Direct labour-hours

$ 400,000

11,000 DLHs

Product 1

Product 2

Machine-hours

5,000

2,000

Number of setups

55

175

Number of products

1

1

Direct labour-hours

7,500

3,500

Required:

What is the companys plantwide-overhead rate?

Using the plantwide overhead rate, how much manufacturing overhead cost is allocated to Product 1? How much is allocated to Product 2?

What is the activity rate for the Machining activity cost pool?

What is the activity rate for the Machine Setups activity cost pool?

What is the activity rate for the Product Design activity cost pool?

What is the activity rate for the General Factory activity cost pool?

Using the ABC system, how much total manufacturing overhead cost would be assigned to Product 1?

Using the ABC system, how much total manufacturing overhead cost would be assigned to Product 2?