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Private Corporation manufactures two types of transpondersno. 156 and no. 157and applies manufacturing overhead to...

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Accounting

Private Corporation manufactures two types of transpondersno. 156 and no. 157and applies manufacturing overhead to all units at the rate of $79.00 per machine hour. Production information follows.

No. 156 No. 157
Anticipated volume (units) 7,000 16,500
Direct material cost $ 45 $ 70
Direct labor cost 50 30

The controller, who is studying the use of activity-based costing, has determined that the firm's overhead can be identified with three activities: manufacturing setups, machine processing, and product shipping. Data on the number of setups, machine hours worked, and outgoing shipments, the activities' three respective cost drivers, follow.

No. 156 No. 157 Total
Setups 65 45 110
Machine hours worked 15,500 28,000 43,500
Outgoing shipments 125 85 210

The firm's total overhead of $3,436,500 is subdivided as follows: manufacturing setups, $265,000; machine processing, $2,665,000; and product shipping, $506,500.

Required:

  1. Compute the pool rates that would be used for manufacturing setups, machine processing, and product shipping in an activity-based costing system.

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