After reading an article about activity-based costing in a trade journal for the furniture industry, Santana Rey decides to analyze overhead cost at Business Solutions. In a recent month, Santana found that setup costs, inspection costs, and utility costs made up most of the company's overhead. Additional information about overhead follows. Budgeted Cost Activity Set up Inspection Utilities $ 20,000 7,500 10,000 ces Total Budgeted Activity Usage 25 setups 5,000 parts inspected 5,000 machine hours (MH) $ 37,500 The following data pertain to Job 615. Direct materials Direct labor Overhead Setups Parts inspected Machine hours Required: $ 2,500 $ 3,500 2 setups 400 parts inspected 600 machine hours 1. Classify each of the three overhead activities as unit level, batch level, product level, or facility level. 2. Assume Business Solutions allocates overhead cost using a plantwide rate based on 5,000 machine hours. Compute total product cost of Job 615. 3. Assume Business Solutions uses activity ased costing. (a) Compute overhead activity rates. (b) Allocate overhead cost to Job 615. (c) Compute total product cost of Job 515. Batch level Classify each of the three overhead activities as unit level, batch level, product lew Setup QUESTION 1 IS Inspection Product level INSPECTION CORRECT? Utilities Facility level < Required 1 Required 2 Allocate overhead to Job 615 using plantwide rate Department Job 615 Total product cost of Job 615 $ Plantwide Overhead Rate 10,500.00 Machine Hours Used Overhead Allocated 5,000 Job 615 Direct Materials Direct Labor Overhead $ 3,400 $ Compute overhead activity rates Activity Setup nspection Utilities QUESTION 2 ALL OF THIS IS WRONG Product Cost 3,400 Activity Rate $ 800.00 per setup $ 1.50 per part $ 2.00 per MH b. Allocate overhead to Job 615 based on actual activity usage Activity Setup Inspection Utilities Total allocated cost Allocated Cost $ 1,600 600 1,200 $ 3,400 c. Total product cost of Job 615 based on activity-based costing Job 615 Direct Materials $ 2,500 Direct Labor 3,500 Overhead 3,400 Product Cost $ 9,400 QUESTION 3