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(Solved) (Latest ver. Aug 2020) - Overhead rate-activity based costing

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a. Determine the overhead rate for each activity.
b. Assign the manufacturing overhead costs for April to the two products using activity-based costing.
c. Write a memorandum to the president of Fribourg Instrument explaining the benefits of activity-based costing.

E4-8 Fribourg 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 $89,000 were incurred. An analysis
of overhead costs reveals the following activities.

ActivityCost DriverTotal Cost
1. Materials handlingNumber of requisitions $35,000
2. Machine setupsNumber of setups 27,000
3. Quality InsoectionsNumber of Inspections 27,000

Cost DriverInstrumentsGaugesTotal
Number of requisitions 400 600 1,000
Number of setups 200 300 500
Number of Inspections 200 400 600


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