Sorce Instrument, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 50 range instruments and 300 pressure gauges were produced, and overhead costs of $89,500 were estimated. An analysis of estimated overhead costs reveals the following activities.
|
Activities |
Cost Drivers |
($) Total Cost |
|
1. Materials Handing |
Number of requisition |
35,000 |
|
2. Machine setups |
Number of setups |
27,500 |
|
3. Quality inspections |
Number of inspections |
27,000 |
|
$89,500 |
The cost driver volume for each product was as follows:
|
Cost Drivers Instruments |
Gauges |
Total |
|
|
Number of requisition |
400 |
600 |
1,000 |
|
Number of setups |
200 |
300 |
500 |
|
Number of inspections |
200 |
400 |
600 |
Instructions:
(a) Determine the overhead rate for each activity.
(b) Assign the manufacturing overhead costs for April to the two products using activity based costing.