B D E F 1 A 1. Compute the total budgeted manufacturing overhead cost for the upcoming year. 2 (Always use cell references and formulas where appropriate to receive full credit.) 3 Total Budgeted 4 Activity Indirect Cost 5 Materials handling 6 Machine setups 7 Insertion of parts 8 Finishing 9 Total budgeted indirect costs 10 11 2. Compute the manufacturing overhead cost per wheel of each model using ABC. 12 (Always use cell references and formulas where appropriate to receive full credit.) 13 14 Activity Allocated Activity Cost Per Wheel 15 Standard Deluxe 16 Materials handling 17 Machine setups 18 Insertion of parts 19 Finishing 20 Total ABC allocated indirect cost 21 22 3. Compute the company's traditional plantwide overhead rate. 23 (Always use cell references and formulas where appropriate to receive full credit.) 24 25 Plant overhead rate per direct labor hour 26 27 Use this rate to determine the manufacturing overhead cost per wheel under the traditional system. 28 Manufacturing overhead cost per wheel 30 Standard 31 Deluxe 29 32 33 34 35 36 37 38 39 40 41 INSTRUCTIONS ENTERANSWERS + D E F G G H 1 L A Activity-Based Costing, Lean Operations, and the Costs of Quality Use ABC to allocate manufacturing overhead 3 Several years after reengineering its production process, Dettling Corporation hired a new controller, Alana Metzgar. She developed an ABC system very similar to the one used by Dettling's chief rival. Part of the reason Metzgar developed the ABC system was because Dettling's profits had been declining, even though the company had shifted its product mix toward the product that had appeared most profitable under the old system. Before adopting the new ABC system, the company had used a plantwide overhead rate based on direct labor hours that 4 was developed years ago. 5 6 For the upcoming year, Dettling's budgeted ABC manufacturing overhead allocation rates are as follows: 7 Activity Cost 8 Activity Allocation Base Allocation Rate 9 Materials handling Number of parts $ 4.50 per part 10 Machine setup Number of setups $ 325.00 per setup 11 Insertion of parts Number of parts $ 31.00 per part Finishing direct labor 12 Finishing hours $ 51.00 per hour 13 The number of parts is now a feasible allocation base because Dettling recently installed a plantwide computer system. Dettling produces two wheel models: Standard and Deluxe. Budgeted data for the upcoming year are as 14 follows: 15 16 Standard Deluxe Units 17 Expected production for each model 1,000 18 Parts per wheel 4.0 6.0 19 Setups per 1,000 wheels 20.0 20.0 20 Finishing direct labor hours per wheel 1.0 3.0 21 Total direct labor hours per wheel 2.7 3.8 22 23 Use the blue shaded areas on the ENTERANSWERS tab for inputs. 24 Always use cell references and formulas where appropriate to receive full credit. 25 26 Requirements 27 1 Compute the total budgeted manufacturing overhead cost for the upcoming year. 28 2 Compute the manufacturing overhead cost per wheel of each model using ABC. 29 3 Compute the company's traditional plantwide overhead rate. Use this rate to determine the manufacturing overhead cost per wheel under the traditional system. 30 31 Saving & Submitting Solution 32 1 Save file to desktop. 33 a. Create folder on desktop, and label COMPLETED EXCEL PROJECTS 34 2 Upload and submit your file to be graded. 35 a. Navigate back to the activity window - screen where you downloaded the initial spreadsheet 36 b. Click Choose button under step 3; locate the file you just saved and click Open 37 C. Click Upload button under step 3 38 d. Click Submit button under step 4 39 40 Viewing Results 41 41 1 Click on Results tab in MyAccountinglab 42 2 Click on the Assignment you were working on 43 3 Click on Project link; this will bring up your Score Card 44 4 Within Score Card window, click on Live Comments Report (lower right) to download spreadsheet with feedback 45 46 47 48 49 INSTRUCTIONS ENTERANSWERS +