Fortunado, Inc. uses activity-based costing to account for its chrome bumper manufacturing process. Company managers have identified four manufacturing activities: materials handling, machine setup, insertion of parts, and finishing. The budgeted activity costs for 2014 and their allocation bases are as follows:

Fortunado expects to produce 500 chrome bumpers during the year. The bumpers are expected to use 4,000 parts, require 10 setups, and consume 1,000 hours of finishing time.

Requirements
1. Compute the predetermined overhead allocation rate for each activity.
2. Compute the expected indirect manufacturing cost of eachbumper.

Transcribed Image Text:

Total Budgeted Cost Activity Materials handling Machine setup Insertion of parts Finishing Total Allocation Base S 9,000 3,900 42,000 82,000 136,900 Number of parts Number of setups Number of parts Finishing direct labor hours