Question

Tornado 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 2016 and their allocation bases are as follows:
Tornado Champs expects to produce 20 custom-built motorcycles for the year. The motorcycles are expected to require 60 inspections, 20 setups, and 100 machine hours.
Requirements
1. Compute the predetermined overhead allocation rate for each activity.
2. Compute the expected indirect manufacturing cost of each motorcycle.


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  • CreatedJune 15, 2015
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