Air United, 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 $94,500 were estimated. An analysis of estimated overhead costs reveals the following activities.Activities Cost Drivers Total Cost1. Materials handling Number of requisitions $40,0002. Machine setups Number of setups 21,5003. Quality inspections Number of inspections 33,000 $94,500The cost driver volume for each product was as follows.Cost Drivers Instruments Gauges TotalNumber of requisitions 400 600 1,000Number of setups 200 300 500Number of inspections 200 400 600(a) Determine the overhead rate for each activity. Overhead RateMaterials handling $enter a dollar amount per requisition per requisitionMachine setups $enter a dollar amount per setup per setupQuality inspections $enter a dollar amount per inspection per inspection

The overhead rate is a cost associated with the manufacture of a product or service. An overhead…

Answered: Air United, Inc. manufactures two…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Air United, 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 $94,500 were estimated. An analysis of estimated overhead costs reveals the following activities.

Activities	Cost Drivers	Total Cost
1.	Materials handling	Number of requisitions	$40,000
2.	Machine setups	Number of setups	21,500
3.	Quality inspections	Number of inspections	33,000
			$94,500

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

(a)

Determine the overhead rate for each activity.

	Overhead Rate
Materials handling	$enter a dollar amount per requisition	per requisition
Machine setups	$enter a dollar amount per setup	per setup
Quality inspections	$enter a dollar amount per inspection	per inspection