Answer the following questions assuming the company is using a traditional company-wide overhead rate based on direct labor hours. Show your calculations.

1. The company-wide overhead rate is:

2. The amount of overhead costs allocated to Job A is:

3. The amount of overhead costs allocated to Job B is:

4. The total production cost of Job A is:

5. The total production cost of Job B is:

6. The production cost of each surfboard (unit cost) for Job A:

7. The production cost of each surfboard (unit cost) for Job B:

Answer the following questions assuming the company is using Activity Based Costing. Show your calculations.

8. The company overhead allocation rates are:

8. The amount of overhead costs allocated to Job A is:

8. The amount of overhead costs allocated to Job B is:

The total production cost of Job A is:

The total production cost of Job B is:

The production cost of each surfboard (unit cost) for Job A:

8. The production cost of each surfboard (unit cost) for Job B:

Assume you are the manager who need to decide on the appropriate cost system, which cost system would you prefer? Why?

Based on your findings above, under the company-wide allocation rate, is there a problem of over/under costing? Explain you answer.

Is there additional information you would need to evaluate the pricing and profitability of these jobs?

The Old Man Surfing Company manufactures custom surfing boards for surfing camps and surfing teams competing in national and regional competitions based on the customerspecifications and with the team/camp logo printed on the board surface. The following overhead costs and cost drivers were estimated for the upcoming year: Expect ed Costs 80,000 Expect ed Quanti ty 100 200,00 0 Overhead Pool Setup costs Material Preparation Molding and shaping Sealing and finishing 96,000 78,000 Cost Driver Number of setups Direct material costs Machine hours Sealing and finishing Labor costs 5,200 66,000 132.000 Total direct labor hours for next year were estimated at 40,000. The following data pertainto two recent completedjobs: Cost of direct materials Job A Job B 10,0 15,00 00 0 8.00 14.00 0 0 50 100 Cost of direct labor Number of units completed Number of direct labor hours Number of setups Number of machine hours Sealing and finishing labor costs 400 4 800 250 200 350 400