Frederick, 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 2009 and their allocation bases are as follows:

Frederick, Inc., expects to produce 1,000 chrome bumpers during the year. The bumpers are expected to use 3,000 parts, require 10 setups, and consume 2,000 hours of finishing time.

Requirements 

1. Compute the cost allocation rate for each activity.

2. Compute the indirect manufacturing cost of each bumper. Product costing in an activity-based costing system

Transcribed Image Text:

Activity Materials handling Total Budgeted Cost Allocation Base $ 9,000 Number of parts Machine setup 3,400 Number of setups Insertion of parts 48,000 Number of parts Finishing Total 80,000 $140,400 Finishing direct labor hours