Automotive Products (AP) designs and produces automotive parts in 2017, actual manufacturing overheads $318,000. AP's simple costing system allocates manufacturing overhead to its three customers based on machine hours and prices its contracts based on all costs. One of its customers has regularly complained of being charged noncompetitive prices, so AP's controller Devon Johnson rares that it is time to examine the consumption of overhead resources more closely. He knows that there are three main departments that consume overhead resources: design, production and engineering Interviews with the department personnel and inton of me records the following detailed information Click the icon to view the information) Rom ments 4 of 4 (2 complete) Luces automotive parts. In 2017, actual manufacturing overhead is $318,000. AP's simple costing system allocates manufacturing overhe nd on full costs. One of its customers has regularly complained of being charged noncompetitive prices, so AP's controller Devon Johnsa re closely. He knows that there are three main departments that consume overhead resources: design, production, and engineering. Inte yield the Data Table over base. verhea swer to the ne Department Cost Driver Design CAD-design-hours Engineering Engineering-hours Production Machine-hours Usage of Cost Drivers by Customer Contract Manufacturing Aegean Overhead in 2017 Rural Motors Motors Jerdon Auto $ 38,000 115 202 83 30,000 85 78 237 250,000 1,480 318,000 220 3,300 Total Print [Done] the input fields and then click Check Answer Clear All we ..ON kno * Requirements wing 1. alloca | alle using the Idyo 3. Compute the manufacturing overhead allocated to each customer in 2017 using the simple costing system that uses machine-hours as the allocation base. Compute the manufacturing overhead allocated to each customer in 2017 using department-based manufacturing overhead rates. Comment on your answers in requirements 1 and 2. Which customer do you think was complaining about being overcharged in the simple system? If the new department-based rates are used to price contracts, which customer(s) will be unhappy? How would you respond to these concerns? How else might AP use the information available from its department-by-department analysis of manufacturing overhead costs? AP's managers are wondering if they should further refine the department-by-department costing system into an ABC system by! identifying different activities within each department. Under what conditions would it not be worthwhile to further refine the department costing system into an ABC system? 4. 5. Print Done he input field Requirement 1. Compute the manufacturing overhead allocated to each customer in 2017 using the simple costing system that uses machine-hours as the allocation base Determine the formule needed to calculate overhead using the simple costing method and then calculate AP's manufacturing overhead rate for 2017 (Round your answer to the nearest cont.) Manufacturing overhead rate per machine hour Choose from any list or enter any number in the input fields and then click Check Answer 9 parts and Clear All Check Answi
