Question:
Product costing inanactivity-based costing system [15-20 min]Turbo Champs, Corp., uses activity-based costing to account for its motorcycle man-ufacturing process. Company managers have identified three supporting manufac-turing activities: inspection, machine setup, and machine maintenance. The budgetedactivity costs for 2012 and their allocation bases are as follows:1Number of inspectionsNumber of setupsMaintenance hoursTotalBudgeted Cost$ 6,00032,0005,000$ 43,000InspectionMachine setupMachine maintenanceTotalActivity Allocation BaseTurbo Champs expects to produce 20 custom-built motorcycles for the year.The motorcycles are expected to require 100 inspections, 20 setups, and100 maintenance hours.Requirements
1. Compute the cost allocation rate for each activity.
2. Compute the indirect manufacturing cost of each motorcycle.