West Horizon uses ABC to account for its chrome wheel manufacturing process. Company managers have identified four manufacturing activities that incur manufacturing overhead costs: materials handling, machine setup, insertion of parts, and finishing. The budgeted activity costs for the upcoming year and their allocation bases are as follows: LOADING...(Click the icon to view the budgeted costs and activity bases.) West Horizon expects to produce 1 comma 000 chrome wheels during the year. The wheels are expected to use 3 comma 100 parts, require 25 setups, and consume 2 comma 400 hours of finishing time. Job 420 used 100 parts, required 3 setups, and consumed 110 finishing hours. Job 510 used 450 parts, required 5 setups, and consumed 350 finishing hours. Read the requirementsLOADING Requirement 1. Compute the cost allocation rate for each activity. First identify the formula, then compute the rate for each activity.

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Materials handling:$8700:Number of parts

Machine setup:$4650:Number of setups

Insertion:of parts:$49,300:number of parts

Finishing:$75,600:Finishing direct labor hours

Total:$138,259

West Horizon expects to produce 1,000 chrome wheels during the year. The wheels are expected to use 3,100 parts, require 25 setups, and consume 2,400 hours of finishing time. Job 420 used 100 parts, required 3 setups, and consumed 110 finishing hours. Job 510 used 450 parts, required 5 setups, and consumed 350 finishing hours

For Machine Handling:. = $3 per part

For Machine Setup = $186 per Setup

For Insertion = $16 per part

For Finishing = $31.5 per hour

Explanation:

Cost allocation rate is calculated by:

Total activity overhead/(Total activity allocation base)

For Machine Handling:.

Total Activity Overhead = $8,700

Total Activity Allocation Base = 3,100

So, Cost Rate Allocation = $8,700/3,100

Cost Rate Allocation = 2.806451612903225

Cost Rate Allocation = $3 per part Approximated to the nearest dollar

For Machine Setup

Total Activity Overhead = $4,650

Total Activity Allocation Base = 25

Cost Allocation Rate = $4,650/25

Cost Allocation Rate = $186 per Setup

For Insertion:

Total Activity Overhead = $49,300

Total Activity Allocation Base = 3,100

Cost Allocation Rate = $49,300/3,100

Cost Allocation Rate = $15.90322580645161

Cost Allocation Rate = $16 per part Approximated to the nearest dollar

For Finishing:

Total Activity Overhead = $75,600

Total Activity Allocation Base = 2,400

Cost Allocation Rate = $75,600/2400

Cost Allocation Rate = $31.5 per hour

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