E Wrap Text Calibri (Body) 12v A A BI U BILA X fx Paste 24 Merge & Center 1 A B C D E F G H I J K L M N -E174 - Assien overhead using traditional.costing and ABC Name: Altex Inc, manufactures two products: car wheels and truck wheels. To determine the amount of overhead to Sassign to each product line, the controller, Robert Hermann, has developed the following information Truck 10,000 40,000 Estimated wheels produced Direct labor hours per wheel 01 .02 Total estimated overhead costs for the two product lines are: $850,000 103 204 instructions 105 (a) Compute the overhead cost assigned to the car wheels and truck wheels, assuming that direct labor hours 106 is used to allocate overhead costs. 107 (6) Hermann is not satisfied with the traditional method of allocating overhead because he believes that most 108 of the overhead costs relate to the truck wheels product line because of its complexity. He therefore develops 109 the following three activity cost pools and related cost drivers to better understand these costs. 112 Total Expected Use of Estimated Overhead Activity Cost Pools Cost Drivers Costs Setting up machines 1,000 setups $260.000 Assembling 70,000 labor hours 320,000 Inspection 1.200 inspections 270,000 116 $850,000 117 Compute the activity based overhead rates for these three cost pools 118 c) Compute the cost that is assigned to the car wheels and truck wheels product lines using an activity-based 119 costing system, given the following information, 120 Expected Use of Cost Drivers per Product Truck 123 Number of setups Direct labor hours 40.000 30,000 125 Number of inspections 1.100 100 127 (di What do you believe Hermann should do? 129 NOTE: Enter a number in cells requesting a value: enter either a number or a formula in cells with a "". 132 E17-4 Edit MacBook Air esc AutoSave UPF 2 Home Insert Formulas Data Review View Draw Page Layout Calibri (Body) 11 BTUE AA 2 BX EE E 9 Wrap Text Merge & Center Paste A M147 XV fx 135 (a) 136 Direct labor hours for car wheels Direct labor hours for truck wheels Total Direct labor hours 137 238 139 Total estimated overhead Total direct labor hours OH rate/DLH 143 Overhead assigned: Truck wheels Total Overhead Direct labor hours Overhead rate / direct labor hour Total OH assigned 148 150 Expected Use ABC OH 152 (b) E stimated OH of Cost Drivers Activity Cost Pool Setting up machines Assembling Inspection /setup labor hour 154 155 15 Car Wheels 255 ABC OH Expected Use of Cost Driver/Unit Bates Assigned 161 Activity Cost Pool Setting up machines Assembling Inspection Total cost assigned 163 164 165 Truck Wheels Expected Use of ABC OH Cost Assigned 169 170 Activity Cost Pool Setting up machines Assembling Inspection Total cost assigned E17-4 Ready MacBa