-8- UVA-C-2 Exhibit 4 ZAUNER ORNAMENTS Historical Five-Year Plant-Administration Costs and Other Data Total Plant Ending Inventory Number of Total Direct % of Plant Administration Costs Cost Plant Personnel Customers Labor Costs Capacity Used 2003 $300,000 $90,000 122 1200 $520,000 70% 2002 295,000 83,000 122 1250 515,000 75% 2001 285,000 58,000 119 1100 85% 2000 555,000 280,000 50,000 112 800 540,000 90% 1999 290,000 76,000 116 600 500,000 95% ch O Hi X-4- UVA-C-2181 indirect manufacturing costs to products based on the activities performed on those products. Yu thought she might be able to use ABC to reflect Zauner's product costs more accurately, thereby improving product-pricing decisions. Assignment Questions 1. Determine the best base for allocating plant-administration costs. 2. Calculate the ABC costs for each product on a per-box basis. 3. What do these results tell you about activity-based costing versus costing based on standard volume or direct materials plus direct labor? 4. What changes, if any, should management make to Zauner's pricing strategy?t's safer to stay in Pr i NOTICE Most features are disabled because your Office product is inactive. To use for free, sign in and use th Picture 1 X V fx A B D E F G H Please Answer Question 1 here! 2 The case presents five potential allocation bases for assigning the company's $300,000 in W Plant-administration costs. Using the five years of data presented in case Exhibit 4, you should 4 conceptually hypothesize which potential base would be the best choice. You need to look for 5 the best correlation, or regression fit, with plant-administration costs (use excel - insert- scatter 6 function to find the trend graph). 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21