Frederick Group uses ABC to account for its chrome wheel manufacturing process. Company managers have identified four manufacturing activities that incur manufacturing overhead costs: materials handling, machine setup, insertion of parts, and finishing. The budgeted activity costs for the upcoming year and their allocation bases are as follows: Activity Total budgeted manufacturing overhead cost Allocation base
Material handeling 8700 Number of parts
Machine setup 4650 Number of setups
Insertion of parts 49300 Number of parts
Finishing 75600 Finishing direct labour hours
Total 138250
Frederick Group expects to produce 1,000 chrome wheels during the year.
The wheels are expected to use 2,900 parts, require 15 setups, and consume 1,800 hours of finishing time. Job 420
Job 420 used 150 parts, required 4 setups, and consumed 120 finishing hours.
Job 510 used 500 parts, required 5 setups, and consumed 320 finishing hours.
Requirements
1.Compute the cost allocation rate for each activity.
2. Compute the manufacturing overhead cost that should be assigned to Job 420.
3. Compute overhead cost that should be assigned to Job510.