Sorce Instrument, Inc. manufactures two products: missile range instruments
and space pressure gauges. During April, 50 range instruments and 300 pressure gauges
were produced, and overhead costs of $89,500 were estimated. An analysis of estimated
overhead costs reveals the following activities.
Activities Cost Drivers Total Cost
1.Materials handling Number of requisitions $35,000
2. Machine setups Number of setups 27,500
3. Quality inspections Number of inspections 27,000
Total $89,500
The cost driver volume for each product was as follows:
Cost Drivers Instruments Gauges Total
Number of requisitions 400 600 1,000
Number of setups 200 300 500
Number of inspections 200 400 600
Instructions :
(a) Determine the overhead rate for each activity.
(b) Assign the manufacturing overhead costs for April to the two products using activity based costing