Cruise Corporation produces standard machine parts which are produced in batches. The engineering department designs the parts; once the design specifications are established, the equipment can be set up for batch production. After the completion of each batch, a sample is inspected for quality defects. In addition to engineering, changeovers, machining, and inspection, there are two additional activities: providing space and providing utilities throughout the plant. The following costs were estimated for 2021: Activity Activity Measure Estimated Activity Cost Estimated Volume of Activity Measure Engineering Engineering-hours $ 247,500 10,000 engineering-hours Changeovers Number of setups 220,000 400 setups Machining Machine-hours 455,000 50,000 machine-hours Inspection Inspection-hours 198,000 5,000 inspection-hours Providing space Machine-hours 56,900 50,000 machine-hours Providing utilities Machine-hours 48,200 50,000 machine-hours During 2021, Cruise Corporation produced 3,000 and 1,000 units, respectively, of its two main parts, 109 and 226. Additionally, these two parts consumed the following resources. Part 109 Part 226 Engineering-hours 2,000 3,000 Number of setups 80 120 Inspection-hours 1,000 1,500 Machine-hours 15,000 10,000 Required: 1. Cruise has traditionally used machine-hours to allocate all overhead costs to its different parts. Compute the total overhead cost per unit assigned to parts 109 and 226. 2. Create activity cost pools for the different activities and compute the activity rates using activity-based costing. 3-a. Compute the total overhead cost per unit assigned to parts 109 and 226 using the rates computed in Requirement (2) above. 3-b. This part of the question is not part of your Connect assignment. 4. The actual overhead costs for 2021 were different from the allocated costs, thereby resulting in an underapplied overhead amounting to $49,900 under the traditional method of overhead allocation using machine-hours as a base. Do you expect that the underapplied overhead amount will change if the company switches to activity-based costing? 5. For 2022, Cruise expects its costs, prices, and sales volumes to remain at the 2021 levels. Will its 2022 income change if the company switches to activity-based costing?

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Cruise has traditionally used machine-hours to allocate all overhead costs to its different parts. Compute the total overhead cost per unit assigned to parts 109 and 226. (Round your intermediate calculations and final answers to 2 decimal places.)

	Part 109 Part 226 Overhead cost per unit

• Req 1

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• Compute the total overhead cost per unit assigned to parts 109 and 226 using the rates computed in Requirement (2) above. (Round your intermediate calculations and final answers to 2 decimal places.)

  	Part 109 Part 226 Overhead cost per unit

• Req 2

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• Req 3A
• Req 4
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• The actual overhead costs for 2021 were different from the allocated costs, thereby resulting in an underapplied overhead amounting to $49,900 under the traditional method of overhead allocation using machine-hours as a base. Do you expect that the underapplied overhead amount will change if the company switches to activity-based costing?

  	Yesradio button unchecked1 of 2 Noradio button unchecked2 of 2

• Req 3A

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