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Ideal Manufacturing Company has supported a research and development (R&D) department that has for many years been the sole contributor to the company's new farm machinery products. The R&D activity is an overhead cost center that performs services only to in-house manufacturing departments (four different product lines), all of which produce agricultural/farm/ranch-related machinery products. The department has never sold its services to outside companies. But, because of its long history of success, larger manufacturers of agricultural products have approached Ideal to hireits R&D department for special projects . Because the costs of operating the R&D department have been spiraling uncontrollably, Ideal's management is considering entertaining these outside approaches to absorb the increasing costs. However, (1) management doesn't have any cost basis for charging R&D services to outsiders, and (2) it needs to gain control of its R&D costs. Management decides to implement an activity-based costing system in order to determine the charges for both outsiders and the in-house users of the department's services. R&D activities fall into four pools with the following annual costs. $810,000 2,318,300 Market analysis Product design Product development Prototype testing 3,224,000 1,375,000 Activity analysis determines that the appropriate cost drivers and their usage for the four activities are: Total Estimated Drivers Activities Cost Drivers Market analysis Hours of analysis 13,500 hours Product design Number of designs 2,390 designs Number of products 80 products Product development Prototype testing Number of tests 550 tests Compute the activity-based overhead rate for each activity cost pool. Activity-Based Overhead Rates Activities Cost Pools Market analysis $ per hour Product design $ per design Product development $ per product Prototype testing $ per test How much cost would be charged to an in-house manufacturing department that consumed 1,820 hours of market analysis time, was provided 260 designs relating to 10 products, and requested 95 engineering tests? Total overhead assigned $ e Textbook and Media How much cost would serve as the basis for pricing an R&D bid with an outside company on a contract that would consume 810 hours of analysis time, require 173 designs relating to 4 products, and result in 65 engineering tests? Total overhead assigned $ e Textbook and Media

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