Air United, Inc. manufactures two products: missile range instruments and space pressure gauges. During April, 50 range instruments and 200 pressure gauges were produced, and overhead costs of $97,045 were estimated. An analysis of estimated overhead costs reveals the following activities. Activities Cost Drivers Total Cost
1. Materials handling Number of requisitions $40,000
2. Machine setups Number of setups 21,500
3. Quality inspections Number of inspections 33,000
$94,500
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

Required:
a. Determine the overhead rate for each activity.
b. Assign the manufacturing overhead costs for April to the two products, using activity-based costing.

Results are below.

Explanation:

First, we need to calculate the activities predetermined overhead rate:

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

Materials handling= 40,000 / 1,000= $40 per requisition

Machine setups=  21,500 / 500= $43 per setup

Quality inspections=  33,000 / 600= $55 per inspection

Now, we can allocate overhead costs to each product:

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

Instruments:

Materials handling= 40*400= $16,000

Machine setups= 43*200= $8,600

Quality inspections=  55*200= $11,000

Total overhead= $35,600

Gauges:

Materials handling= 40*600= $24,000

Machine setups= 43*300= $12,900

Quality inspections=  55*400= $22,000

Total overhead= $58,900

answer; customers within the organization

since the options are not listed, when you are working on your budget you should also add water, tv, internet, miscellaneous and your 'fun' money for in your budget. when budgeting, you need to allow for fun money, and mis/accidental money so that you stick to the budget and not go crazy because you feel strapped to the budget.