The is an important guideline for officers and directors in the routine management of corporate business. It is also an important factor in determining the liability of the principals to the shareholders of a corporation for the decisions that are made in the operation of the business.

Mordica company identifies three activities in its manufacturing process: machine setups, machining, and inspections. estimated annual overhead cost for each activity is $156,960, $382,800, and $84,640, respectively. the cost driver for each activity and the expected annual usage are number of setups 2,180, machine hours 25,520, and number of inspections 1,840. compute the overhead rate for each activity. machine setups $ per setup machining $ per machine hour inspections $ per inspection