View Policies 9 Current Attempt in Progress Donald Martin has been studying his department's profitability reports for the past six months. He has just completed a managerial accounting course and is beginning to question the company's approach to allocating overhead to products based on machine hours. The current department overhead budget of $1,098,160 is based on 54,908 machine hours. In an initial analysis of overhead costs, Donald has identified the following activity cost pools. Cost Pool Product assembly Machine setup and calibration Product inspection Raw materials storage Expected Cost Expected Activities $ 664,000 41,500 machine hours 313,600 4,900 setups 61.160 1,390 batches 59,400 270,000 pounds $ 1,098,160 Donald Martin is taking the next step in his exploration of activity-based costing and wants to examine the overhead costs that would be allocated to two of the department's four products. He has gathered the following budget information about each product. Component T76 Driver Usage Machine hours Component 3F5 1,080 10,600 Setups 38 17 Batches 15 15 Pounds of raw materials 10,000 10,000 (a) Calculate the total overhead allocated to each component under the traditional method using machine hours as the overhead application base.