1 Problem 9-58 (Algo) Activity-Based Costing and Predetermined Overhead Rates (LO 9-3,5,6) 10 points College Supply Company (CSC) makes three types of drinking glasses: short, medium, and tail. It presently applies overhead using a predetermined rate based on direct labor-hours. A group of company employees recommended that CSC switch to activity-based costing and identified the following activities, cost drivers, estimated costs, and estimated cost driver units for Year 5 for each activity center eBook Activity Setting up production Processing orders Handling materials Using machines Providing quality management Packing and shipping Recommended Cost Driver Number of production runs Number of orders Pounds of materials Machine hours Number of inspections Units shipped Estimated Cost $ 36,000 52,800 18,000 77,000 56,000 36,00 $275,800 Estimated cost Driver Units 120 runs 220 orders 9,000 pounds 11,00 hours 40 Inspections 18,000 units Print References In addition, management estimated 2,000 direct labor-hours for year 5. Assume that the following cost driver volumes occurred in February, year 5. Medium 400 Tall 300 $2,500 100 4 Number of units produced Direct materials costs Direct labor hours Number of orders Number of production runs Pounds of material Machine-hours Number of inspections Units shipped Short 900 $4,000 100 7 3 400 500 2 900 $2,500 100 7 4 800 400 2 400 300 200 3 200 Direct labor costs were $20 per hour Required: a. Compute a predetermined overhead rate for year 5 for each cost driver recommended by the employees. Also compute a predetermined rate using direct labor hours as the allocation base, b. Compute the production costs for each product for February using direct labor-hours as the allocation base and the predetermined rate computed in requirement a c. Compute the production costs for each product for February using the cost drivers recommended by the employees and the predetermined rates computed in requirement a. (Note: Do not assume that total overhead applied to products in February will be the same for activity-based costing as it was for the labor hour based allocation.) Camnate the nnectinn hantering Hancur in the he hal Complete this question by entering your answers in the tabs below. ces Required A Required B Required Compute a predetermined overhead rate for year 5 for each cost driver recommended by the employees. Also comput predetermined rate using direct labor-hours as the allocation base. (Round your answers to 2 decimal places.) Allocation Rate per run Activity Setting up production Processing orders Handling materials Using machines Performing quality management Packing & shipping Direct labor hour rate per order per lb. per hour per insp per unit per hour Required A Required B Required c Compute the production costs for each product for February using the cost drivers recommended by the employees and the predetermined rates computed in requirement a. (Note: Do not assume that total overhead applied to products in February will be the same for activity-based costing as it was for the labor-hour-based allocation.) (Do not round intermediate calculations.) Show less Short Medium 4,000 $ 2,500 $ Tall 2,500 Direct materials Direct labor Setting up production Processing orders Handling materials Using machines Performing quality management Shipping Total costs Required A Required B Required c Compute the production costs for each product for February using the cost drivers recommended by the employees and the predetermined rates computed in requirement a. (Note: Do not assume that total overhead applied to products in February will be the same for activity-based costing as it was for the labor-hour-based allocation.) (Do not round intermediate calculations.) Show less Short Medium 4,000 $ 2,500 $ Tall 2,500 Direct materials Direct labor Setting up production Processing orders Handling materials Using machines Performing quality management Shipping Total costs