E4-4 Altex Inc. manufactures two products: car wheels and truck wheels. To determine the amount of overhead to assign to each product line, the controller, Robert Hermann, has developed the following information. Estimated wheels produced Direct labor hours per wheel Car 40,000 1 Total estimated overhead costs for the two product lines are $770,000. Instructions (a) Compute the overhead cost assigned to the car wheels and truck wheels, assuming that direct labor hours is used to allocate overhead costs. Activity Cost Pools Setting up machines Assembling Inspection Truck 10,000 3 (b) Hermann is not satisfied with the traditional method of allocating overhead because he believes that most of the overhead costs relate to the truck wheels product line because of its complexity. He therefore develops the following three activity cost pools and related cost drivers to better understand these costs. Expected Use of Cost Drivers 1,000 setups 70,000 labor hours 1,200 inspections Estimated Overhead Costs $220,000 280,000 270,000 Compute the activity-based overhead rates for these three cost pools. (c) Compute the cost that is assigned to the car wheels and truck wheels product lines using an activity-based costing system, given the following information.

Name: E4-4 Altex Inc. manufactures two products: car wheels and truck wheel
Uploaded: 2024-03-20T06:32:49.000Z
Channel: Bartleby
Description: E4-4 Altex Inc. manufactures two products: car wheels and truck wheels. To determinethe amount of overhead to assign to each product line, the controller, Robert Hermann,has developed the following information.Estimated wheels producedDirect labor h