1)Compute the variable manufacturing overhead for each customer in 2007 using simple costing system that has the machine hours as the allocation base.

2)Compute the variable manufacturing overhead for each customer in 2007 using departmental based variable manufacturing overhead rates.

given;
in 2007 actual variable overhead 308600

Department
Design
Engineering
Production

Cost Driver
CAD design hrs
Engineer hrs
Machine hrs

Var Manf OverHEAD
39000
29600
240000

cost driver by customer
UM
110
70
120

HM
200
60
2800

LV
80
240
1080

total 308600