Use the following information to answer the following questions. Magnolia Company makes products B546 and C245. Information for overhead costs and for the two products appears below. The company makes 100,000 units of product B546 each year and 20,000 units of product C245.

Activity

Driver

Total Overhead Cost

Product B546 Usage

Product C245 usage

Set up

# of setups

$200,000

500 setups

1,500 setups

Ordering parts

# of parts

$300,000

60,000 parts

40,000 parts

Machining

machine hours

$600,000

12,000 machine hrs

6,000 machine hours

Inspection

# of inspections

$400,000

10,000 inspections

40,000 inspections

Shipping

# of shipments

$300,000

10,000 shipments

10,000 shipments

Total overhead

$1,800,000

12. Use the information from the Magnolia Company and assume that Activity Based Costing is used, with each activity in its own cost pool. What is the rate per setup that should be used to assign set up cost to the two products? (15 points)

a.

$900 per set up

b.

$400 per set up

c.

$100 per set up

d.

$200,000 per set up