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

8. The company overhead allocation rates are:

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

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

11. The total production cost of Job A is:

12. The total production cost of Job B is:

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

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

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

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

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

4. Traditional Costing vs. Activity Based Costing (25 points). The Outer Banks Surfing Company manufactures custom surfing boards for surfing camps and surfing teams competing in national and regional competitions based on the customer specifications and with the team/camp logo printed on the board surface. The following overhead costs and cost drivers were estimated for the upcoming year: Overhead Pool Setup costs Material Preparation Molding and shaping Sealing and finishing Expected Costs 80,000 96,000 78,000 66,000 Cost Driver Number of setups Direct material costs Machine hours Sealing and finishing Labor costs Expected Quantity 100 200,000 5,200 32,000 Total direct labor hours for next year were estimated at 40,000. The following data pertain to two recent completed jobs: Job A 10,000 8,000 50 Cost of direct materials 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 Job B 15,000 14,000 100 800 4 200 400 4 250 350 400