Question
Vandalay Industries manufactures twoproducts: toasters and blenders. The annual production and sales of toasters is 2,100 units, while 1,800 units of blenders are produced and
Vandalay Industries manufactures twoproducts: toasters and blenders. The annual production and sales of toasters is 2,100 units, while 1,800 units of blenders are produced and sold. The company has traditionally used direct labor hours to allocate its overhead to products. Toasters require 1.25 direct labor hours perunit, while blenders require 1 direct labor hours per unit. The total estimated overhead for the period is $ 147,415. The company is looking at the possibility of changing to an activity-based costing system for its products. If the company used an activitybased costingsystem, it would have the following three activity costpools:
Activity cost pool Estimated overhead costToasters Blenders Total
Setup costs $8,685 225 batches 440 batches 665 batches
Engineering costs $ 70,980 820 engineering 860 engineering hours 1,680 engineering hrs
Maintenance costs $67,750 2,700 direct labor hours 1,295 direct labor hours 3,995 direct labor hours
Total 147,415
The cost pool activity rate for Engineering Costs would be closest to(Round all answers to two decimalplaces.)
A.$54.81 per engineering hour.
B. $42.25 per engineering hour.
C.$16.96 per engineering hour.
D.$13.06 per engineering hour.
*Need equations and to show work*
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