Northstar Company uses ABC to account for its chrome wheel manufacturing process. Company managers have identified four manufacturing activities that incur manufacturing overhead costs: materials handling, machine setup, insertion of parts, and finishing. The budgeted activity costs for the upcoming year and their allocation bases are as follows:

Northstar expects to produce 1,000 chrome wheels during the year. The wheels are ­expected to use 3,000 parts, require 10 setups, and consume 2,000 hours of finishing time.
Job 420 used 150 parts, required 2 setups, and consumed 100 finishing hours.
Job 510 used 500 parts, required 4 setups, and consumed 310 finishing hours.

Requirements
1. Compute the cost allocation rate for each activity.
2. Compute the manufacturing overhead cost that should be assigned to Job 420.
3. Compute the manufacturing overhead cost that should be assigned to Job510.

Transcribed Image Text:

Total Budgeted Manufacturing Overhead Cost Activity Materials handling.. Machine setup Insertion of parts. Finishing Total Allocation Base 12,000 Number of parts 3,400 48,000 Number of setups Number of parts 80000 Fnishing direct labor hours $143.400