Zimmerman Company manufactures two products, Board 12 and Case 165. Zimmerman's overhead costs consist of setting up machines, $2,400,000; machining, $5,400,000; and inspecting, $1,800,000. Information on the two products is: $\begin{array}{lrr}&\text { Board } 12&\text { Case } 165\
\text { Direct labor hours } & 15,000 & 25,000 \
\text { Machine setups } & 600 & 400 \
\text { Machine hours } & 24,000 & 26,000 \
\text { Inspections } & 800 & 700
\end{array}$ Overhead applied to Case 165 using activity-based costing is

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To calculate the overhead applied to Case 165 using activity-based costing (ABC), we first need to determine the overhead rates for each activity. This is done by dividing the total cost for each activity by the total activity units for both products.1. Machine setups: $2,400,000 / (600 + 400) = $2,400 per setup2. Machining: $5,400,000 / (24,000 + 26,000) = $108 per machine hour3. Inspecting: $1,800,000 / (800 + 700) = $1,200 per inspectionNext, we calculate the overhead applied to Case 165 for each activity:1. Machine setups: 400 setups * $2,400 = $960,0002. Machining: 26,000 machine hours * $108 = $2,808,0003. Inspecting: 700 inspections * $1,200 = $840,000Adding these amounts gives the total overhead applied to Case 165:$960,000 + $2,808,000 + $840,000 = $4,608,000.

Zimmerman Company Manufactures Two Products, Board 12 and Case 165