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Concord Company identifies three activities in its manufacturing process: machine setups, machining, and inspections. Estimated annual overhead cost for each activity is $198,800, $337,400, and $81,000, respectively. The cost driver for each activity and the estimated annual usage are number of setups 2,800, machine hours 24,100, and number of inspections 1,500. Compute the overhead rate for each activity.

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Answer:

Instructions are listed below.

Explanation:

Giving the following information:

Machine setups

Estimated annual overhead cost= $198,800

Number of setups 2,800

Machining

Estimated annual overhead cost= $337,400

Machine hours 24,100

Inspections.

The estimated annual overhead cost= $81,000

Number of inspections 1,500.

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Machine Setup:

Estimated manufacturing overhead rate= 198,800/2,800= $71 per setup

Machining:

Estimated manufacturing overhead rate= 337,400/24,100= $14 per machine hour

Inspections:

Estimated manufacturing overhead rate= 81,000/1,500= $54 per inspection.

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