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Tesla Motors produces three models: Model S, Model 3, and Model Y. The company has...

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Accounting

Tesla Motors produces three models: Model S, Model 3, and Model Y. The company has identified four activity cost pools and their respective cost drivers as follows:

Activity Cost Pools:

  • Setup costs
  • Material handling costs
  • Machine maintenance costs
  • Quality inspection costs

Cost Drivers:

  • Number of setups
  • Number of material moves
  • Machine hours
  • Number of inspections

For the month of June, the following activity and cost data were recorded:

  • Total setup costs: $150,000
  • Total material handling costs: $100,000
  • Total machine maintenance costs: $120,000
  • Total quality inspection costs: $80,000

Additionally, the following activity data were gathered for each model:

  • Model S: 30 setups, 800 material moves, 1000 machine hours, 150 inspections
  • Model 3: 20 setups, 600 material moves, 1200 machine hours, 200 inspections
  • Model Y: 15 setups, 500 material moves, 800 machine hours, 100 inspections

Calculate the activity-based overhead rates for each cost pool and allocate the overhead costs to each model using the ABC method.

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