Activity Based Costing ( 16 marks ) 2 GoFast Company makes two types of kids ride - on vehicles - toy fire trucks and toy police cars . Data regarding the two products follow : Description Toy Fire Trucks Toy Police Cars $ Selling Price per unit 300.00 $ 200.00 80.00 $ 45.00 Direct material costs per unit 5 4 Direct labor hours per unit 20.00 20.00 $ Direct labor wage rate per hour 10 Annual production in units 60,000 40,000 11 12 Trucks are more complex to manufacture than cars . The ABC system has the following activity cost pools : Total Toy Fire Trucks Toy Police Cars Activity Measure Estimated Overhead Cost 14 Activity Cost Pool 3,000 5,100 - 1/100 15 Processing 16 Machine setups 125 325 $ $ $ 300,000 number of machine hours 150,000 number of setups 60,000 number of inspection hours 120 90 210 17 Inspection 18 19 Required : 20 Part 1 : Calculate the activity rates for each of the three activities ( 3 marks ) : 21 Processing Rate 2 Machine setup Rate Inspection Rate