Northstar uses ABC to account for its chrome wheel manufacturing process. Company man-agers have identified four manufacturing activities that incur manufacturing overhead costs: materials handling, machine set-up, 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 set-ups, and consume 2,000 hours of finishing time. Job 420 used 150 parts, required 1 set-up, and consumed 120 finishing hours. Job 510 used 425 parts, required 2 set-ups, and consumed 320 finishing hours.
Requirements
1. Compute the cost allocation rate for each activity.
2. Compute the MOH cost that should be assigned to Job 420.
3. Compute the MOH cost that should be assigned to Job 510.

Transcribed Image Text:

Total Budgeted Manufacturing Overhead Cost Activity Materials handling Machine set-up Insertion of parts Finishing Total Allocation Base $12,000 Number of parts 3,400 Number of set-ups 48,000 Number of parts 80,000 Finishing direct labour hours $143,400