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Upriver Parts manufactures two products, V-1 and V-2, at its River Plant. Selected data for an average month for the two products follow. V-1 V-2

Upriver Parts manufactures two products, V-1 and V-2, at its River Plant. Selected data for an average month for the two products follow.

V-1 V-2
Units produced 10,000 1,000
Direct materials cost per unit $ 2 $ 4
Machine hours per unit 1 2
Production runs per month 80 40

Production at the plant is automated and any labor cost is included in overhead. Data on manufacturing overhead at the plant follow.

Machine depreciation $ 90,000
Setup labor 39,600
Material handling 18,720
Total $ 148,320

Exercise 9-38 (Algo) Activity-Based Costing and Cost Driver Rates (LO 9-4)

Required:

a. Upriver currently applies overhead on the basis of machine hours. What is the predetermined overhead rate for the month? (Round your answer to 2 decimal places.) b. Upriver is thinking of adopting an ABC system. They have tentatively chosen the following cost drivers: machine hours for machine depreciation, production runs for setup labor, and direct material dollars for material handling. Compute the cost driver rates for the proposed system at Upriver. (Round "Machine depreciation" answer to 2 decimal places.)

a. Overhead rate per machine hour
b. Machine depreciation per machine hour
Setup labor per production run
Material handling % direct material cost

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