3. 
   

Activity	Total Cost	Activity Driver	Driver Quantity
Setup	$20,000	Number of setups	50 setups
Machining	$30,000	Machine hours	2,000 hours
Assembly	$25,000	Direct labor hours	5,000 hours

Requirements:

• Calculate the predetermined overhead rate for each activity.
• Determine the overhead applied to a job that requires 100 setups, 300 machine hours, and 600 direct labor hours.
• Calculate the total overhead cost assigned to all jobs if 20 setups, 1,000 machine hours, and 2,500 direct labor hours are incurred.
• Discuss the advantages and limitations of activity-based costing compared to traditional costing methods.
• Propose improvements to the company's cost allocation system.