Northstar uses $\backslash ($ A B C $\backslash )$ to account for its chrome wheel manufacturing process. Company managers have identified four manufacturing activities that incur manufacturing overhead costs: materials handling, machine setup, insertion of parts, and finishing.

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Requirement $1.$ Compute the cost allocation rate for each activity. First identify the formula, then compute the rate for each activity.

Activity cost allocation rate Additional information

The budgeted activity costs for the upcoming year and their allocation bases are as follows:

Northstar expects to produce $1,000$ chrome wheels during the year. The wheels are expected to use $2,600$ parts, require $15$ setups, and consume $1,600$ hours of finishing time.

Job $420$ used $100$ parts, required $3$ setups, and consumed $120$ finishing hours. Job $510$ used $500$ parts, required $5$ setups, and consumed $320$ finishing hours. Northstar uses ABC to account for its chrome wheel manufacturing process. Company managers have identified four manufacturing activities that incur manufacturing overhead costs: materials handling, machine setup, insertion of parts, and finishing.

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Requirements

ate for each activity.

vity cost

ation rate

$1.$ Compute the cost allocation rate for each activity.

$2.$ Compute the manufacturing overhead cost that should be assigned to Job $420.$

$3.$ Compute the manufacturing overhead cost that should be assigned to Job $510.$