Plantwide, department, and activity cost rates. (J. Watson) (CGA, adapted) Sayther Com- as pany manufactures and sells

Question:

Plantwide, department, and activity cost rates. (J. Watson) (CGA, adapted) Sayther Com- as pany manufactures and sells two products, A and B. The manufacturing activity is organized in 1.

a. Product A, $18,600, two departments. Manufacturing overhead (MOH) costs at its Calgary plant are allocated to product g. 955,800 each product using a plantwide rate of $24.80 per direct manufacturing labour-hour (DMLH).

This rate is based on budgeted MOH of $595,200 and 24,000 budgeted DMLH: image text in transcribed

At the end of the year, there was no work in process. There were 150 finished units of product A and 450 finished units of product B on hand. Assume that the budgeted production level of the Calgary plant was exactly attained.
Sayther sets the listed selling price of each product by adding 150% to its unit manufacturing costs; that is, if the unit manufacturing costs are $100, the listed selling price is $250 ($100 + $150). This 150% markup is designed to cover costs upstream to manufacturing (for example, product design) and costs downstream from manufacturing (for example, marketing and customer service) as well as to provide an operating income.

REQUIRED 1. What is the manufacturing cost included in the inventory of products A and B if Sayther uses

(a) a plantwide overhead rate and

(b) department overhead rates?
2. What difference would result in the per-unit selling prices of product A and product B from using a plantwide overhead rate instead of department overhead rates?
3. Should Sayther Company prefer plantwide or department manufacturing overhead rates?
4. Under what conditions should Sayther Company further subdivide the department cost pools into activity cost pools?
LO1