1. Compute the total budgeted manufacturing overhead cost for the upcoming year. (Always use cell references and formulas where appropriate to receive full credit. If you copy/paste from the Instructions tab or if you type the numbers in, you will be marked wrong.) Activity-Based Costing, Lean Operations, and the Costs of Quality Use ABC to allocate manufacturing overhead Several years after reengineering its production process, Dettling Corporation hired a new controller, Alana Metzgar. She developed an ABC system very similar to the one used by Dettling's chief rival. Part of the reason Metzgar developed the ABC system was because Dettling's profits had been declining, even though the company had shifted its product mix toward the product that had appeared most profitable under the old system. Before adopting the new ABC system, the company had used a plantwide overhead rate based on direct labor hours that was developed years ago. For the upcoming year, Dettling's budgeted ABC manufacturing overhead allocation rates are as 5 follows: 8 Activity Allocation Base Activity Cost Allocation Rate 9 Materials handling Number of parts 10 Machine setup Number of setups $ 4.50 per part 325.00 per setup 11 Insertion of parts Number of parts $ 31.00 per part 12 13 Finishing Finishing direct labor hours $ 51.00 per hour The number of parts is now a feasible allocation base because Dettling recently installed a plantwide computer system. Dettling produces two wheel models: Standard and Deluxe. Budgeted data for the 14 upcoming year are as follows: 15 76 Standard Expected production for each model Parts per wheel Setups per 1,000 wheels Finishing direct labor hours per wheel Total direct labor hours per wheel 23 Use the blue shaded areas on the ENTERANSWERS tab for inputs. Deluxe 4.0 6.0 20.0 20.0 1.0 3.0 2.7 3.8 Units 1,000 Insertion of parts Finishing per setup Number of parts Finishing direct labor hours S 31.00 per part $ 51.00 per hour The number of parts is now a feasible allocation base because Dettling recently installed a plantwide computer system. Dettling produces two wheel models: Standard and Deluxe. Budgeted data for the upcoming year are as follows: Standard Expected production for each model Parts per wheel Setups per 1,000 wheels Finishing direct labor hours per wheel Total direct labor hours per wheel Deluxe 4.0 6.0 20.0 20.0 1.0 3.0 2.7 3.8 Units 1,000 Use the blue shaded areas on the ENTERANSWERS tab for inputs. Always use cell references and formulas where appropriate to receive full credit. If you copy/paste from the Instructions tab or if you type the numbers in, you will be marked wrong. Requirements 1 Compute the total budgeted manufacturing overhead cost for the upcoming year. 2 Compute the manufacturing overhead cost per wheel of each model using ABC. 3 Compute the company's traditional plantwide overhead rate. Use this rate to determine the manufacturing overhead cost per wheel under the traditional system. 1. Compute the total budgeted manufacturing overhead cost for the upcoming year. (Always use cell references and formulas where appropriate to receive full credit. If you copy/paste from the Instructions tab or if you type the numbers in, you will be marked wrong.) Total Budgeted Indirect Cost 5 Materials handling 5 Machine setups 7 Insertion of parts 8 Finishing Activity 9 Total budgeted indirect costs 10 11 2. Compute the manufacturing overhead cost per wheel of each model using ABC. (Always use cell references and formulas where appropriate to receive full credit. If you 12 copy/paste from the Instructions tab or if you type the numbers in, you will be marked wrong.) 13 14 Activity Allocated Activity Cost Per Wheel +