Vaughn Inc. manufactures two products: car wheels and truck wheels. To determine the amount of overhead to assign to each product line, the controller, Robert Hermann, has developed the following information Truck Car 36,000 12,000 Estimated wheels produced Direct labor hours per wheel 1 Total estimated overhead costs for the two product lines are $763,200. Your answer is correct. Calculate overhead rate. (Round answer to 2 decimal places, e.g. 12.25) Overhead rate $ 10.6 per direct labor hour Your answer is correct. Compute the overhead cost assigned to the car wheels and truck wheels, assuming that direct labor hours is used to allocate overhead costs. Car wheels $ 381600 Truck wheels $ 381600 Your answer is correct Hermann is not satisfied with the traditional method of allocating overhead because he believes that most of the overhead costs relate to the truck wheels product line because of its complexity. He therefore develops the following three activity cost pools and related cost drivers to better understand these costs. Estimated Use of Cost Drivers Estimated Overhead Costs Activity Cost Pools Your answer is correct Hermann is not satisfied with the traditional method of allocating overhead because he believes that most of the overhead costs relate to the truck wheels product line because of its complexity. He therefore develops the following three activity cost pools and related cost drivers to better understand these costs. Estimated Overhead Costs Estimated Use of Cost Drivers 1,000 Setups 72,000 labor hours 1.200 inspections Activity Cost Pools Setting up machines Assembling Inspection $216,000 288,000 259,200 Compute the activity-based overhead rates for these three cost pools. Overhead Rates Setting up machines $ 216.00 Assembling $ 4.00 Inspection $ 216.00 Compute the cost that is assigned to the car wheels and truck wheels product lines using an activity-based costing system, given the following information Estimated Use of Cost Drivers per Product Car Truck 200 800 Number of setups Direct labor hours Number of inspections 36,000 36,000 100 1.100 Car Wheels Truck Wheels $ Setting up machines Assembling Inspection 102 Total cost assigned