Question

Exercise 17-09 a-b (Video) (Part Level Submission) Oriole, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 50 range instruments and 200 pressure gauges were produced, and overhead costs of $88,010 were estimated. An analysis of estimated overhead costs reveals the following activities. Activities Cost Drivers Total Cost 1. Materials handling Number of requisitions $37,080 2. Machine setups Number of setups 28,710 3. Quality inspections Number of inspections 22,220 $88,010 The cost driver volume for each product was as follows. Cost Drivers Instruments Gauges Total Number of requisitions 390 640 1,030 Number of setups 200 295 495 Number of inspections 240 265 505 Collapse question part (a) Determine the overhead rate for each activity

Answer 1

Answer and Explanation:

The computation of the overhead rate for each activity is shown below

For machine handling

= $37,080 ÷ 1,030

= $36 per unit

For machine setups

= $28,710 ÷ 495

= $58 per unit

For Quality inspections

= $22,220 ÷ 505

= $44 per unit

In this way, the overhead rate for each activity would be determined

The same would be relevant