Compute the predetermined overhead allocation rate

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Reference no: EM132521855

OH cost per unit $1,685

Turbo Champs Corp. uses activity-based costing to account for its motorcycle manufacturing process. Company managers have identified three supporting manufacturing activities: inspection, machine setup, and machine maintenance. The budgeted activity costs for 2018 and their allocation bases are as follows:

ActivityTotal Budgeted Cost Allocation Base

Inspections$ 5,700

Number of inspections

Machine setup 22,000

Number of setups

Machine maintenance 6,000

Finishing of machine hours

Total$ 33,700

Turbo Champs expects to produce 20 custom-built motorcycles for the year. The motorcycles are expected to require 100 inspections, 40 setups, and 100 machine hours.

Requirements

Question 1: Compute the predetermined overhead allocation rate for each activity.

Question 2: Compute the expected indirect manufacturing cost of each motorcycle.

Reference no: EM132521855

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