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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
400
600
1,000
200
300
500
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.
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