The Messenger Fones Company designs and manufactures cell phones. The company currently offers two models; the T328 and the SS356. The company has three operating departments: design, engineering and production. In the past, the company has been allocating the manufacturing overhead based on machine hours. However, Kayla Rined, the product manager of T328, has a hunch that their current method of using only machine hours as a cost allocation base is resulting in the allocation of too much overhead costs to her product. She has proposed that the company use the ABC system to cost products.

In 2010, the actual manufacturing overhead was $211,000. The following indicates the total amount of machine hours used for the production of each cell phone model in 2010.

	Machine Hours
T328	2,400 hours
SS356	2,500 hours
Total Machine Hours	4,900 hours

Do not enter dollar signs or commas in the input boxes. a) Calculate the manufacturing overhead cost allocation rate using machine hours. Round your answers to 2 decimal places. Manufacturing overhead cost allocation rate: $Answer b) Determine the manufacturing overhead allocated to each model using the manufacturing overhead cost allocation rate determined in part (a). Round your answers to the nearest whole number. T328: $Answer SS356: $Answer c) The Messenger Fones Company is considering changing their costing system by tracing manufacturing overhead costs to the three operating activities. The following is the amount of manufacturing overhead costs traceable to the designing, engineering and production activities.

Operating Areas	Cost Drivers	Total Costs
Designing	Number of design hours	$73,000
Engineering	Number of engineering hours	$51,000
Production	Number of machine hours	$61,000
Total		$185,000

The total cost allocation units used for each product line are:

Cost Allocation Base	T328	SS356	Total
Design hours	1,400	1,900	3,300
Engineering hours	1,700	2,100	3,800
Machine hours	2,400	2,500	4,900

Determine the manufacturing overhead rate for each activity. In addition, use the manufacturing overhead rates to calculate the allocated overhead for each model. Round your answers to 2 decimal places.

Manufacturing overhead rates
Designing	$Answer
Engineering	$Answer
Production	$Answer

Round your answers to the nearest whole number.

Manufacturing Overhead
T328	$Answer
SS356	$Answer

d) Was Kayla Rined's hunch about the allocation of too much overhead costs to her product right? AnswerNoYes Round your answers to the nearest whole number. Under-allocation / Over-allocation: $Answer