Reference no: EM132078031

Question - Fortunado, Inc., uses activity-based costing to account for its chrome bumper manufacturing process. Company managers have identified four manufacturing activities: materials handling, machine setup, insertion of parts, and finishing. The budgeted activity costs for 2012 and their allocation bases are as follows:

Activity	Total Budgeted Cost	Allocation Base
Materials handling	$ 9,000	Number of parts
Machine setup	3,900	Number of setups
Insertion of parts	42,000	Number of parts
Finishing	82,000	Finishing direct labor hours
Total	$ 136,900

Fortunado expects to produce 500 chrome bumpers during the year. The bumpers are expected to use 4,000 parts, require 10 setups, and consume 1,000 hours of finishing time.

Requirements -

1. Compute the cost allocation rate for each activity.

2. Compute the indirect manufacturing cost of each bumper.