Compute the cost that is assigned to the car wheels and truck wheels product lines using an activity-based costing system, given the following information. (Round answers to 0 decimal places, e. g. 1,575.) Expected Use of Cost Drivers per Product Car Truck Number of setups 200 800 Direct labor hours 40,000 30,000 Number of inspections 100 1,100

Results are below.

Explanation:

First, we need to calculate the activity rates. We weren't provided with the estimated costs for each activity. I will assume some costs and formulas to guide an answer.

Set up costs= $100,000

Assembly (direct labor)= $1,200,000

Inspection= $250,000

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

Set up= 100,000 / 1,000= $100 per set up

Assembly= 1,200,000 / 70,000= $17.14 per direct labor hour

Inspection= 250,000 / 1,200= $208.33 per inspection

Now, we can allocate costs to each product line:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Car:

Set up= 100*200= $20,000

Assembly= 17.14*40,000= $685,600

Inspection= 208.33*100= $20,833

Truck:

Set up= 100*800= $80,000

Assembly= 17.14*30,000= $514,200

Inspection= 208.33*1,100= $229,163

d. the economy will face inflation.