Altex Inc Manufactures Two Products

Altex Inc. articles two products: motorcar wheels and truck wheels. To determine the amount

Altex Inc. manufactures two products: machine wheels and truck wheels. To make up one's mind the amount of overhead to assign to each product line, the controller, Robert Hermann, has developed the following information.

Car Truck

Estimated wheels produced 43,330 fifteen,000

Directly labor hours per bicycle ane 3

Total estimated overhead costs for the two product lines are $758,190.

Overhead rate $ 8.58 per straight labor hour

The overhead cost assigned to the motorcar wheels and truck wheels, assuming that direct labor hours is used to allocate overhead costs.

Car wheels $ 371,771.40

Truck wheels $ 386,100

Hermann is not satisfied with the traditional method of allocating overhead because he believes that well-nigh of the overhead costs chronicle to the truck bicycle production line because of its complexity. He therefore develops the following three activity cost pools and related cost drivers to amend understand these costs.

Activity Toll Pools Expected Utilize of Cost Drivers

Estimated Overhead

Costs

Setting upwards machines 1,000 setups $222,000

Assembling 88,330 labor hours 264,990

Inspection i,200 inspections 271,200

Compute the activity-based overhead rates for these three cost pools.

Overhead Rates

Setting upward machines $

Assembling $

Inspection $