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Question - Brooklyn Cycles produces custom bicycles and has used a traditional manufacturing overhead application rate based on direct labor hours. Currently, overhead is applied at the rate of $28.0/DLH. Brooklyn is now considering using activity-based driver rates to improve manufacturing overhead costing accuracy. Budgeted manufacturing overhead costs for expected driver activity are as follows:
Budgeted Cost
Budgeted Activity
Machining time
$324,000
12,000 hours
Direct labor time
352,000
22,000 hours
Inspection time
60,000
6,000 hours
Required - Calculate manufacturing overhead rates that would be applied to bicycles produced using activity-based costing.
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