The controller for Tulsa Medical Supply Company has established the following activity cost pools and cost drivers.

Activity Cost Pool Budgeted Overhead Cost Cost Driver Budgeted

Level for Cost

Driver Pool Rate

Machine setups $ 440,000 Number of setups 110 $ 4,000 per setup

Material handling 105,000 Weight of raw material 35,000 lb. $ 3 per pound

Hazardous waste control 70,000 Weight of hazardous chemicals used 7,000 lb. $ 10 per pound

Quality control 150,000 Number of inspections 2,000 $ 75 per inspection

Other overhead costs 500,000 Machine hours 25,000 $ 20 per machine hour

Total $ 1,265,000

An order for 1,000 boxes of medical-testing agent has the following production requirements.

Machine setups 7 setups

Raw material 12,000 pounds

Hazardous materials 4,000 pounds

Inspections 10 inspections

Machine hours 600 machine hours

Required:

1. Compute the total overhead that should be assigned to the medical-testing agent order.

2. What is the overhead cost per box of testing agent?

3. Suppose Tulsa Medical Supply Company were to use a single predetermined overhead rate based on machine hours. Compute the rate per hour.

4. Under the approach in requirement 3, how much overhead would be assigned to the medical-testing agent order?

a. In total.

b. Per box of testing agent.