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John Manufacturing (JM) manufactures metal products and uses activity-based costing to allocate overhead costs to customer orders for pricing purposes. Many customer orders are won through competitive bidding based on costs. Direct material and direct manufacturing labor costs are traced directly to each order. JM's direct manufacturing labor rate is $20 per hour. The company reports the following budgeted yearly overhead costs: $480,000 60,000 120,000 Wages and salaries Depredation Rent Other overhead Total overhead costs $900,000 JM has established four activity cost pools and the following budgeted activity for each cost pool: Budgeted Total Activity for the Year Activity Cost Pool Direct manufacturing laborNumber of direct manufacturing Activity Measure 30,000 direct manufacturing support Order processing Design support Other labor-hours Number of customer orders Number of custom design-hours 2,490 custom design bours Facility-sustaining costs allocated 30,000 direct manufacturing 500 orders to orders based on direct manufacturing labor-hours labor-hours Some customer orders require more complex designs, while others need simple designs. JM estimates that it will do 120 complex designs during a year, which will each take 11.75 hours for a total of 1.410 design-hours. It estimates it will do 180 simple designs, which will each take6 hours for a total of 1.080 design-hours

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