Fortunado 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:

Fortunado expects to produce 1,000 chrome wheels during the year. The wheels are expected to use 3,200 parts, require 25 setups, and consume 2,300 hours of finishing time.
Job 420 used 250 parts, required 3 setups, and consumed 130 finishing hours.
Job 510 used 425 parts, required 6 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 Allocation Base S 6,400 Number of parts 9,000 54,400 89,700 $159,500 Number of setups Number of parts Finishing direct labor hours nsertion of parts Total