Farraway 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:

Farraway expects to produce 1,000 chrome wheels during the year. The wheels are expected to use 3,300 parts, require 20 setups, and consume 2,100 hours of finishing time.
Job 420 used 200 parts, required 2 setups, and consumed 150 finishing hours.
Job 510 used 400 parts, required 4 setups, and consumed 320 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 Job 510.

Transcribed Image Text:

Total Budgeted Manufacturing Overhead Cost $ 13,200 5,200 49,500 Allocation Base Activity Materials handling Machine setup . Insertion of parts. Finishing Total Number of parts Number of setups Number of parts Finishing direct labor hours 86.100 $154.000