Factory utilities $80,000Factory foremen salaries $81,000Machinery setup costs $25,000Total manufacturing overhead $186,000

Starbright manufactures children car seats, strollers, and baby swings. Starbright’s manufacturing costs are budgeted as follows:

The company uses activity-based costing to allocate its manufacturing overhead costs to products based on the following schedule:

Overhead Cost Allocation Base Estimated Activity Level Factory Utilities Direct labor hours 14,100 Factory foremen salaries Machine hours 17,100 Setup costs Number of production runs 114

During the current month, the following levels of activities were incurred:

Car SeatsStrollersBaby SwingsTotal Direct Labor Costs$ 55,900 $ 94,250 $ 33,150 $ 183,300 Direct Labor Hours4,300 7,250 2,550 14,100 Machine Hours5,200 9,000 2,900 17,100 Production Runs30 52 32 114 Units Produced1,500 2,500 870 4,870

What are the setup costs allocated to Strollers during the current month?

$6,579.

$7,018.

$11,404.

Cannot be determined.

 

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