(SHOW ALL COMPUTATIONS or no credit given) 10. Vertex Tires manufactures tires f

Question

(SHOW ALL COMPUTATIONS or no credit given)

10. Vertex Tires manufactures tires for dune buggies and has two different products, nubby tires and smooth tires. The company produces 5,000 nubby tires and 10,000 smooth tires each year and incurs $175,000 of overhead costs. The following information is available: Cost Driver Total cost $75,000 ??- Purchasing Testing Inspections 40,000 60,000 Number of purchase orders Number of tests Number of inspections For the nubby tires, the company has 400 purchase orders, 200 tests, and 200 inspections. The smooth tires require 600 purchase orders, 300 tests, and 400 inspections. Instructions For each of the three activities listed above, compute the o rate.

Explanation / Answer

The correct answer is :

Note :

1. Activity Rates :

  Activity Activity Rate Purchasing 75.00 Testing 80.00 Inspections 100.00

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