Problem 2

The following information is provided for Orbit Antenna Corp., which manufactures two products: Lo-Grain antennas and Hi-Grain antennas for use in remote areas.

ActivityCostAllocation Base

Setup$58,000Number of setups

Machine maintenance30,000Number of machine hours

Total indirect manufacturing costs$88.000

Lo-GrainHi-GrainTotal

Direct labor hours1,2003,8005,000

Number of setups404080

Number of machine hours3,0002,0005,000

Orbit Antenna plans to produce 125 Lo-Grain and 225 Hi-Grain antennas.

Required:

1.Compute the indirect manufacturing cost per unit using direct labor hours for the single plantwide predetermined overhead allocation rate.

2.Calculate the indirect overhead rate foreach activityusing the costs and allocation bases indicated above.