Solution-Determine the overhead rate for each activity

Determine the overhead rate for each activity

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Reference no: EM13540075

Sorce Instrument, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 50 range instruments and 300 pressure gauges were produced, and overhead costs of $89,500 were estimated. An analysis of estimated overhead costs reveals the following activities.

Activities	Cost Drivers	($) Total Cost
1. Materials Handing	Number of requisition	35,000
2. Machine setups	Number of setups	27,500
3. Quality inspections	Number of inspections	27,000
		$89,500

The cost driver volume for each product was as follows:

	Cost Drivers Instruments	Gauges	Total
Number of requisition	400	600	1,000
Number of setups	200	300	500
Number of inspections	200	400	600

Instructions:

(a) Determine the overhead rate for each activity.

(b) Assign the manufacturing overhead costs for April to the two products using activity based costing.

Reference no: EM13540075

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Determine the overhead rate for each activity

Reference no: EM13540075

Reference no: EM13540075

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