Example 2 Activity Machine Setup Materials Handling Fabricating Parts Supervising Assembly.... Inspecting Packaging. MOH Costs Related to the Activity Indirect labor used to set up machines............ Forklifts, gas, operators' wages. Machine lease payments, electricity, repairs.... Production engineers' labor..... Testing equipment, inspection labor............. Packaging equipment TOTAL MOH Total Activity Cost Pool $ 80,000 200,000 300,000 150,000 170,000 100,000 $1,000,000 Activity Machine Setup Materials Handling Fabricating Parts Supervising Assembly Inspecting Packaging....... Activity Allocation Base Number of setups... Number of parts moved Machine hours.. Direct labor hours... Number of inspections Cubic feet packaged. Total Estimated Amount of Allocation Base 8,000 setups 400,000 parts 12,500 machine hours 50,000 DL hours 34,000 inspections 400,000 cubic feet 1. Based on the estimated indirect costs and allocation base for each activity, compute the cost allocation rate for each activity. 2. Allocate some manufacturing overhead for each activity to the individual jobs that use the activities. The actual use of activity allocation bases connected to job cost record is 2 machine setups (activity: machine setup), 20 parts material handling (activity: material handling), 1 machine hour (activity: fabricating parts), 9 DL hours (activity: supervising assembly), 3 inspections (activity: inspecting), and 52 cubic feet (activity: packaging)