Activities Cost Drivers Total Cost $35,700 30,276 23,580 $89,556 Cost Drivers In
ID: 2419189 • Letter: A
Question
Activities
Cost Drivers
Total Cost
$35,700
30,276
23,580
$89,556
Cost Drivers
Instruments
Gauges
Total
(a)
Overhead Rate
Major Instrument, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 49 range instruments and 297 pressure gauges were produced, and overhead costs of $89,556 were estimated. An analysis of estimated overhead costs reveals the following activities.Activities
Cost Drivers
Total Cost
1. Materials handling Number of requisitions$35,700
2. Machine setups Number of setups30,276
3. Quality inspections Number of inspections23,580
$89,556
The cost driver volume for each product was as follows.
Cost Drivers
Instruments
Gauges
Total
Number of requisitions 393 627 1,020 Number of setups 208 314 522 Number of inspections 268 256 524Explanation / Answer
=35700/1020
=35$/requistion
=30276/522
=58$/setup
=23580/524
=45$/inspection
Activity Materials handling=35700/1020
=35$/requistion
Machine setups=30276/522
=58$/setup
Quality inspections=23580/524
=45$/inspection