Upriver Parts manufactures two products, V-1 and V-2, at its River Plant. Selected data for an average month for
the two products follow.
V-1V-2Units produced 10,000 1,000 Direct materials cost per unit$2 $4 Machine hours per unit 1 2 Production runs per month 80 40
Production at the plant is automated and any labor cost is included in overhead. Data on manufacturing overhead at the plant follow.
Machine depreciation$96,000 Setup labor 42,000 Material handling 19,200 Total$157,200
Exercise 9-38 (Algo) Activity-Based Costing and Cost Driver Rates (LO 9-4)
a. Upriver currently applies overhead on the basis of machine hours. What is the predetermined overhead rate for the month? (Round your answer to 2 decimal places.)
b. Upriver is thinking of adopting an ABC system. They have tentatively chosen the following cost drivers: machine hours for machine depreciation, production runs for setup labor, and direct material dollars for material handling. Compute the cost driver rates for the proposed system at Upriver. (Round Machine depreciation answer to 2 decimal places.)