Attached is the review and numbers I have come up with.
Requirement 3: Once you complete the above two requirements, you will need to prepare a management report explaining your findings and recommending with cost approach you choose. Make sure you support your cost approach. This report should be at least ONE page, not page, not page, but one COMPLETE page.
Im honestly just struggling with all the writing required for this course
Attached is the units produced
Heinz 4,000 $9,000 Kraft 2,000 $5,000 Ranch 2,000 $5,000 # of units produced Direct Materials Costs Direct Labor Hours # of production runs Number of orders Pounds of Material used Machine Hours # of inspections Units Shipped Direct labor costs are $25 per hour 320 4 20 800 240 6 16 600 200 12 10 600 800 20 4,000 600 20 2,000 600 20 2,000 $8,000 $6,000 $5,000 Requirement 1: Part 1: Requirement 1: Part 2: You need to fill in the overhead costs for each one. You do this by taking the allocation rate you calculated in part 1 and multiply it by the activities for each overhead listed. Heinz Kraft Ranch Greenbrier make 3 types of "peel and stick" labels for companies like Heinz, Kraft, and Ranch. Greenbrier applies overhead using a predetermined rate based on direct labor hours. While reviewing the financial information for Greenbrier, you wonder if the company should switch to an activity based costing system. Before making a recommendation to management you decide to evaluate the impact activity based costing will have product costing. Direct Materials $5,000 $5,000 Direct Labor $8,000 $6,000 $5,000 $6,000 $4,500 $4,500 Allocation Rate Overhead Costs: Equip Deer and Maint Activity Bases Estimated Annual Costs Estimated Annual Cost Driver Units (Estimated Annual Costs/ Estimated Annual Cost Driver units) Materials Handling, $2,000 $1,500 $1,500 Order Processing, $5,500 54,400 $2,750 Packing and Shipping $4,800 $2,400 $2,400 Equipment Depreciation and Maintenance Machine Hours 150,000 20,000 $7.5 per unit Production Setup, $1,120 $1,680 $3,360 40,000 Materials Handling $2,750 Production of Materials used $2,750 16,000 Quality Control $2.5 per unit $2,750 Total Overhead $5.54 per unit $8.62 per unit $8.63 per unit Order Processing Number of Orders 110,000 400 $275 per unit Packing and Shipping Number of Units Shipped 90,000 75,000 $1.20 per unit Total Cost $9.79 514.12 $13.63 Production Setup Number of Production Runs 70,000 250 $280 per unit Requirement 2: Part 2: You will complete the same analysis as above using traditional costing, using direct labor hours for the allocation rate. Hint: Traditional costing uses the predetermined overhead rate. To calculate the predetermined overhead rate, you will take the overhead costs given in requirement 1, part 1 and add them together and then divide that amount by the direct labor hours. Then you will take that amount and multiply it by the direct labor hours for each company. Quality Management Number of Inspections 110,000 800 $137.50 per unit Heinz Kraft Ranch Direct Labor Hour Rate 10,000 Direct Materials $9,000 $5,000 $5,000 Direct Labor $8,000 $6,000 $5,000 $6.84 per unit $5.70 per unit Overhead Costs: Total Cost $4.56 per unit $8.81 $12.34 $10.70 Heinz 4,000 $9,000 Kraft 2,000 $5,000 Ranch 2,000 $5,000 # of units produced Direct Materials Costs Direct Labor Hours # of production runs Number of orders Pounds of Material used Machine Hours # of inspections Units Shipped Direct labor costs are $25 per hour 320 4 20 800 240 6 16 600 200 12 10 600 800 20 4,000 600 20 2,000 600 20 2,000 $8,000 $6,000 $5,000 Requirement 1: Part 1: Requirement 1: Part 2: You need to fill in the overhead costs for each one. You do this by taking the allocation rate you calculated in part 1 and multiply it by the activities for each overhead listed. Heinz Kraft Ranch Greenbrier make 3 types of "peel and stick" labels for companies like Heinz, Kraft, and Ranch. Greenbrier applies overhead using a predetermined rate based on direct labor hours. While reviewing the financial information for Greenbrier, you wonder if the company should switch to an activity based costing system. Before making a recommendation to management you decide to evaluate the impact activity based costing will have product costing. Direct Materials $5,000 $5,000 Direct Labor $8,000 $6,000 $5,000 $6,000 $4,500 $4,500 Allocation Rate Overhead Costs: Equip Deer and Maint Activity Bases Estimated Annual Costs Estimated Annual Cost Driver Units (Estimated Annual Costs/ Estimated Annual Cost Driver units) Materials Handling, $2,000 $1,500 $1,500 Order Processing, $5,500 54,400 $2,750 Packing and Shipping $4,800 $2,400 $2,400 Equipment Depreciation and Maintenance Machine Hours 150,000 20,000 $7.5 per unit Production Setup, $1,120 $1,680 $3,360 40,000 Materials Handling $2,750 Production of Materials used $2,750 16,000 Quality Control $2.5 per unit $2,750 Total Overhead $5.54 per unit $8.62 per unit $8.63 per unit Order Processing Number of Orders 110,000 400 $275 per unit Packing and Shipping Number of Units Shipped 90,000 75,000 $1.20 per unit Total Cost $9.79 514.12 $13.63 Production Setup Number of Production Runs 70,000 250 $280 per unit Requirement 2: Part 2: You will complete the same analysis as above using traditional costing, using direct labor hours for the allocation rate. Hint: Traditional costing uses the predetermined overhead rate. To calculate the predetermined overhead rate, you will take the overhead costs given in requirement 1, part 1 and add them together and then divide that amount by the direct labor hours. Then you will take that amount and multiply it by the direct labor hours for each company. Quality Management Number of Inspections 110,000 800 $137.50 per unit Heinz Kraft Ranch Direct Labor Hour Rate 10,000 Direct Materials $9,000 $5,000 $5,000 Direct Labor $8,000 $6,000 $5,000 $6.84 per unit $5.70 per unit Overhead Costs: Total Cost $4.56 per unit $8.81 $12.34 $10.70
