The new manager at Sailboat Manufacturing oversees the manufacturing operations to ensure the effective manufacturing process of sails to accommodate the special-orders of sails they receive for sailboats. The manager compiled a report that contained the following data: Compute the activity cost allocation rate for each of Sailboat Manufacturing's production activities listed in the report. What should the new manager understand about the cost allocation rates at Sailboat Manufacturing? How will the new manager use the activity cost allocation rates during the coming year at Sailboat Manufacturing?

Activity Step 3: Total Estimated Activity Cost Allocation Rate Sailboat Manufacturing Step 1: Total Step 2: Total Estimated Estimated Amount of Activity Cost Activity Allocation Pool Base $90,000 10,000 setups 425,000 parts 325,000 15,000 machine hours 175,000 60,000 DL hours Machine Setup Materials Handling Parts Fabrication Oversee Assembly Operations Auditing Parts Packaging and Labeling Total MOH 195,000 115,000 40,000 inspections 450,000 cubic feet $1,115,000