The department has never sold its services to outside companies. But, because of its long history of success, larger manufacturers of agricultural products have approached Cullumber to hire its R&D department for special projects. Because the costs of operating the R&D department have been spiraling uncontrollably, Cullumber's management is considering entertaining these outside approaches to absorb the increasing costs. However, (1) management doesn't have any cost basis for charging R&D services to outsiders, and (2) it needs to gain control of its R&D costs. Management decides to implement an activity-based costing system in order to determine the charges for both outsiders and in-house users of the department's services. R&D activities fall into four pools with the following annual costs. Market analysis Product design Product development Prototype testing Activities $1,128,000 2,124,000 Market analysis Product design Product development Prototype testing 4,350,000 Activity analysis determines that the appropriate cost drivers and their usage for the four activities are: 1,560,000 Cost Drivers Hours of analysis Number of designs Number of products Number of tests Total Estimated Drivers 14,100 hours 2,360 designs products 100 520 tests Your answer is correct. Compute the activity-based overhead rate for each activity cost pool. Activities Cost Pools Market analysis Product design Product development Prototype testing LA LA $ LA Activity-Based Overhead Rates 80 900 43500 3000 per hour per design per product per test (b) How much cost would be charged to an in-house manufacturing department that consumed 1,970 hours of market analysis time, was provided 290 designs relating to 11 products, and requested 84 engineering tests? Total overhead assigned eTextbook and Media