Procter & Gamble Co. (P&G) operates multiple manufacturing facilities worldwide. In an effort to better understand and manage its overhead costs, P&G has implemented activity-based costing (ABC). The company identified two primary activities that drive overhead costs: production setup and quality control.

• Activity 1: Production Setup: P&G incurs setup costs whenever a production line is prepared for a new batch of products. These costs include equipment setup, material handling, and labor.
  • Total setup costs: $2,500,000
  • Total setup hours: 5,000
• Activity 2: Quality Control: P&G performs rigorous quality control inspections to ensure that its products meet the highest standards. These inspections involve testing samples, conducting audits, and analyzing data.
  • Total quality control costs: $3,000,000
  • Total inspections conducted: 10,000

Requirements:

1. Calculate the overhead cost allocation rate for production setup.
2. Determine the overhead cost allocation rate for quality control.
3. Allocate the total overhead costs to two product lines, A and B, based on the following usage:
   • Product Line A: 2,000 setup hours, 5,000 quality control inspections
   • Product Line B: 3,000 setup hours, 5,000 quality control inspections