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Modine Manufacturing Company manufactures two products: radiators and gas tanks. During March, 200 radiators and 400 gas tanks were produced and overhead costs of $54,000 were incurred. The following information related to overhead costs was available:
Activity
Cost Driver
Total Cost
Materials handling
Number of requisitions
$20,000
Machine setup
Number of setups
18,000
Quality inspections
Number of inspections
16,000
The cost driver volume for each product was as follows:
Radiators
Gas Tanks
Total
600
400
1,000
120
180
300
190
210
Instructions
(a) Compute the overhead rate for each activity.
(b) Assign the manufacturing overhead costs for March to the two products using activity-based costing and show manufacturing overhead cost per unit for Radiators and Gas Tanks.
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