Bosche Limited manufactures two models of microwaves to cater for different consumers Model 100 has basic functions, and mainly reheats food Model 200 is a more sophisticated model including convention and steam oven options as well as more capacity and power (wattage) and more stylish design and touch settings The following overhead cost pools and activity drivers have been determined Overhead Cost Pool Budgeted Overhead Cost Activity Driver Machine set ups $300,000 Number of setups Material handling $120,000 Number of units of materials used Waste control $20,000 Kilos of waste Quality control inspection $25,000 Number of inspections Other overhead costs $180,000 Labour hours 15,000 units of the MODEL 100 is produced which have the following production requirements No of Machine set ups 20 Set ups Materials used 50,000 units Waste produced 300 kilos Number of inspections 40 inspections Labour hours 1,000 hours 6,000 units of the MODEL 200 is produced, which have the following production requirements No of Machine set ups 30 Set ups Materials used 70,000 units Waste produced 100 kilos Number of inspections 120 inspections Labour hours 500 hours Required 1 If Bosche Limited used a single, predetermined overhead rate based on labour hours, calculate the overhead rate per unit to be assigned to each microwave model Round all calculations and rates to 2 decimal places where applicable 2 If Bosche Limited was to adopt Activity Based Costing (ABC) use the table below to calculate (i) The total cost driver and allocation rate for each overhead cost pool (ii) The total overhead cost allocated to each model for each overhead cost pool (iii) The overhead cost per unit 3 Management of Bosche Limited are looking to reduce costs of production and are considering changing from their long time supplier to a cheaper supplier found by the procurement team Whilst satisfied with the current supplier, they are more expensive than their competitors by approximately 3 What else must be considered by management before making the change

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Bosche Limited manufactures two models of microwaves to cater for different consumers. Model 100 has basic functions, and mainly reheats food. Model 200 is a

Bosche Limited manufactures two models of microwaves to cater for different consumers. Model 100 has basic functions, and mainly reheats food. Model 200 is a more sophisticated model including convention and steam oven options as well as more capacity and power (wattage) and more stylish design and touch settings.

The following overhead cost pools and activity drivers have been determined .

Overhead Cost Pool	Budgeted Overhead Cost	Activity Driver
Machine set-ups	$300,000	Number of setups
Material handling	$120,000	Number of units of materials used
Waste control	$20,000	Kilos of waste
Quality control inspection	$25,000	Number of inspections
Other overhead costs	$180,000	Labour hours

15,000 units of the MODEL 100 is produced which have the following production requirements:

No of Machine set-ups	20 Set-ups
Materials used	50,000 units
Waste produced	300 kilos
Number of inspections	40 inspections
Labour hours	1,000 hours

6,000 units of the MODEL 200 is produced, which have the following production requirements:

No of Machine set-ups	30 Set-ups
Materials used	70,000 units
Waste produced	100 kilos
Number of inspections	120 inspections
Labour hours	500 hours

Required

1. If Bosche Limited used a single, predetermined overhead rate based on labour hours, calculate the overhead rate per unit to be assigned to each microwave model. Round all calculations and rates to 2 decimal places where applicable.

2. If Bosche Limited was to adopt Activity Based Costing (ABC) use the table below to calculate

(i) The total cost driver and allocation rate for each overhead cost pool

(ii) The total overhead cost allocated to each model for each overhead cost pool

(iii) The overhead cost per unit.

3. Management of Bosche Limited are looking to reduce costs of production and are considering changing from their long-time supplier to a cheaper supplier found by the procurement team. Whilst satisfied with the current supplier, they are more expensive than their competitors by approximately 3%. What else must be considered by management before making the change?