AutoSave ON w question.docx - Saving... Home Insert Draw Design Layout References Mailings Review View Tell me Share 0 Comments Calibri (Bo... 12 ~ Aa T AaBbDdEe AaBbCcDdEe ABCI About Abeba AaBbCcDdEe Aa Bbcc Paste B I U v ab x APA Body Text Caption: Fig.. Footer: Base X Footer: Code Footer: Code Header: Foll. Heading 1 Dictate Styles Pane Brighton North uses a conventional volume-based costing system in which manufacturing overhead is applied to units based on direct labour-hours. The management of the company decides to expand their operations and open a new plant with two new line of wheels for luxury and sport cars. They have asked their accountants to produce data for the new plant. Data concerning the new plant with two new product lines appear below: Selling price per unit Direct materials per unit Direct labour per unit Direct labour-hours per unit Estimated annual production and sales Luxury Wheels Sport Wheels $140.00 $99.00 $72.00 $53.00 $24.00 $12.00 2.0 DLHS 1.0 DLHS 20,000 units 80,000 units Data concerning manufacturing overhead and direct labour-hours for the upcoming year appear below: Estimated total manufacturing overhead $1,980,000 Estimated total direct labour-hours 120,000 DLHS Required: 1. Calculate the product margins for the luxury and sport wheels under the company's traditional costing system. (4 marks) 2. The company is considering replacing its traditional costing system with an activity-based costing system that would assign its manufacturing overhead to the following four activity cost pools (the Other cost pool includes organization-sustaining costs and idle capacity costs): Activities and Activity Measures Supporting direct labour (direct labour-hours) Batch setups (setups) Product sustaining (number of products) Other Total manufacturing overhead cost Estimated Expected Activity Overhead Cost Luxury Sport Total $ 783,600 40,000 80,000 120,000 495,000 200 100 300 602,400 1 1 2 99,000 NA NA NA $1.980,000 Calculate the product margins for the luxury and sport wheels under the activity-based costing system. (6 marks) 3. Using your answers for question 1 and 2 above, prepare a quantitative comparison of the traditional and activity-based cost assignments. Discuss the differences between the traditional and activity-based cost systems. (10 marks) Page 3 of 13 4176 words EX English (United States) O Focus E - 117%