E4-11 Sorce Instrument, Inc.

E4-11 Sorce 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 $89,500 were estimated. An analysis of estimated overhead costs reveals the following activities.

Activities                                 Cost Drivers                           Total Cost

1. Materials handling                        Number of requisitions                     $35,000

2. Machine setups                  Number of setups                                27,500

3. Quality inspections                        Number of inspections                        27,000

 

The cost driver volume for each product was as follows.

Cost Drivers                           Instruments                Gauges           Total

Number of requisitions                     400                 600                 1,000

Number of setups                              200                 300                     500

Number of inspections                      200                  400                    600

 

Instructions

(a)   Determine the overhead rate for each activity.

b) Assign the manufacturing overhead costs for April to the two products using activity based costing.