Answer:
a. Machining Department cost driver rate: $11.00 / mh = $440,000/40,000 mh
Assembly Department cost driver rate: $.50 / dl$ = $460,000/$920,000 dl$
b. Total cost of Product #A273 is $9,950 = Direct materials $3,300 + Direct labor $3,300 + Overhead costs $3,350 (Machining $2,200 + Assembly $1,150).
c. Ideally, cost driver(s) should reflect the factor(s) that cause manufacturing overhead costs to increase. Apparently, Tangipahoa regards the use of machines as the principal cause of manufacturing overhead costs (such as depreciation and repairs) in the Machining Department. In contrast, Tangipahoa regards direct labor dollars as the principal cause of manufacturing overhead costs (such as indirect labor) in the Assembly Department. This suggests that the products vary in complexity and may require workers with different skill levels and therefore different wage rates.
Each department uses different types and amounts resources. More than one factor is driving manufacturing overhead costs.