Modine Manufacturing Company manufactures two products: radiators and gas tanks. During March, 200 radiators and 400 gas tanks were produced and overhead costs of $54,000 were incurred. The following information related to overhead costs was available:
|
Activity
|
Cost Driver
|
Total Cost
|
|
Materials handling
|
Number of requisitions
|
$20,000
|
|
Machine setup
|
Number of setups
|
18,000
|
|
Quality inspections
|
Number of inspections
|
16,000
|
|
|
|
The cost driver volume for each product was as follows:
|
Cost Driver
|
Radiators
|
Gas Tanks
|
Total
|
|
Number of requisitions
|
600
|
400
|
1,000
|
|
Number of setups
|
120
|
180
|
300
|
|
Number of inspections
|
190
|
210
|
400
|
Instructions
(a) Compute the overhead rate for each activity.
(b) Assign the manufacturing overhead costs for March to the two products using activity-based costing and show manufacturing overhead cost per unit for Radiators and Gas Tanks.