a leading manufacturing company has two main lines of products Traditional and Modern with the unit sales prices for $340 and $440 respectively. Manufacturing overhead are applied as $544.025 per direct labor hour.

Budgeted statement of gross margin 2018

Products

Sales in units	Traditional 10000	Modern 10000	Total 20000
Beginning finished goods	$480,000.00	$600,000.00	$1,080,000.00
Direct material	$2,000,000.00	$3,500,000.00	$5,500,000.00
Direct labor	$370,370.00	$185,186.00	$555,556.00
Ending finished goods	$480,000.00	$600,000.00	$1,080,000.00

Overhead breakdown in percentage

Machining	52.02%
Assembly	26.59%
Material Handling	6.94%
Inspection	14.45%
Total	100.00%

Products Cost pool info for 2018	Traditional	Modern
Direct labor hours	2000	1000
Machine hours	30000	60000
Assembly hours	12000	11000
Material handling parts	10	20
Inspection hours	1000	1500

Products

Projections 2019	Traditional	Modern
Ending inventory in dollars	$260,000.00	$440,000.00
Sales in units	10200	9800

Material, labors and overhead are expected to increase by 10% each in 2019. Unit sale prices for both products are expected to increase by $10 each in 2019 Percentage of overhead remains the same in 2019

The cost drivers units are staying the same in 2019

There are two clients with special orders for Traditional. The two clients ordered the same number of units

You tracked their COGS by their extra number of specifications per unit by month in 2018

Client one in 2018	# of specifications	COGS
Jan	85	$45,000.00
Feb	65	$32,000.00
Mar	110	$55,000.00
Apr	160	$78,000.00
May	65	$36,000.00
Jun	37	$34,000.00

Jul	29	$19,000.00
Aug	37	$21,000.00
Sep	68	$39,000.00
Oct	81	$51,000.00
Nov	48	$36,000.00
Dec	124	$74,000.00
Total	909	$520,000.00

Client two in 2018 # of specifications COGS

Jan	75	$25,000.00
Feb	55	$15,000.00
Mar	120	$45,000.00
Apr	150	$60,000.00
May	55	$30,000.00
Jun	34	$25,000.00
Jul	27	$15,000.00
Aug	33	$20,000.00
Sep	61	$35,000.00
Oct	77	$45,000.00
Nov	42	$25,000.00
Dec	116	$60,000.00
Total	845	$400,000.00

Required

(Do not round down in calculations until the final answer at two decimal point.)

Prepare a gross margin table based on traditional costing method with sales and COGS in total dollars for 2018 for both product lines

Prepare a gross margin table based on activities method with sales and COGS in total dollars for 2018 for both product lines

What does the information in both 2018 tables tell you?

Prepare a gross margin table based on activities method with sales and COGS in total dollars for 2019 for both product lines

Calculate the fixed cost and variable cost components of COGS for the two clients using the least squares regression method. Show your work and write out the regression model equation for each client.

Discuss the two clients COGS in terms of fixed cost and variable cost according to special specifications.