California Cicuits Company (30) manufactures a variety of components. Its Valey plant specializes in two electronic components used in circuit boards. These components serve the same tinction and perform equally well The difference in the two products in the raw material The XL-D chip is the older of the two components and is made with a metal that requires a wash prior to assembly Ongally the plant released the wastewater directly into a local river. Several years ago, the company was ordered to treat the wastewater before its release, and it installed relatively expensive equipment White the equipment is fully deprecated annual operating expenses of $247000 are still incurred for wastewater treatment Two years ago, company scientists developed an alloy with all of the properties of the raw materials used in XL that generates no wastewater. Some prototype components using the new material were produced and tested and found to be indistinguishable from the old components in every way relating to the fitness for use. The only difference is that the new alloy is more expensive than the old raw material The company has been test marketing the newer version of the component, referred to as XLC, and is currenty trying to decide its fate Manufactuning of both components begins on the Production Department and is completed in the Assembly Department. No other products are produced in the plant The following provides information for the two components XL- Units produced 109,000 25,000 Haw material costs per unit $11.70 $15.70 Direct laborhoors per unit-Production 2.1 Direct labor-hours per uit Assembly 0.4 Direct labor rate per hour all labor $10.50 SIN Hachine hours per unit-Production 1.6 1.6 Machishours per writ-assesbly 8.4 Testing hours per unit (all in production) Shipping weight per unit (pounds) Wastewater rate per unit tons) 10.a 0.0 KB 0.1 94 3. 1. Annual overhead costs for the two departments follow Supervision Material handling Testing Wastewater treatment Depreciation on asiant Shipping Total Production Assembly Department Department $97.000 5237,00 91,500 38,500 147.000 247.000 397,000 97,000 6,00 32.000 5986,200 $435,500 The company president believes that it's foolish to continue producing two essentially equivalent products. At the same time, the corporate image is somewhat tanished because of a toxic clump found at another site not the Valley plant) The president would like to be able to point to the Valley plant as an example of company research and development (R&D) working to provide an environmentally friendly product. The controller points out to the president that the company's financial position is shaky, and it cannot afford to make products in any way other than the most cost efficient one Required: . 3C's current cost accounting system charges overhead to products based on direct labor cost using a single plantwide rate. What product costs will it report for the two products if the current allocation system is used? b. The controller recently completed an executive education course describing the two-stage allocation procedure. Assume that the first stage allocates costs to departments and the second stage allocates costs to products. The controller believes that the costs will be more accurate if machine hours are used to allocate Production Department costs and labor hours are used to allocate Assembly Department costs. What product costs will be reported for the two products if the two-stage allocation process is used? d. The president argues that an activity based costing system would provide even better costs. The company decides to compute product costs assuming on ABC system is implemented only in the Production Department. Overhead in Assembly will continue to be allocated based on direct labor hours. The cost drivers selected for the activity-based costing system are as follows Overhead Item Driver Supervision Direct labor-hours Material handling Material cost Testing Testing hours Hastewater treatment Wastewater generated Depreciation on coulprent Machine-hours Shipping Weight What product costs would be reported if this ABC system were implemented? Assume that the production mix and costs would remain as originally planned Complete this question by entering your answers in the tabs below. Required A Required Required D 3C's current cost accounting system charges overhead to products based on direct labor cost using a single plantwide rate. What product costs will it report for the two products if the current allocation system is used? (Round "Overhead percentage to the nearest whole percent and other intermediate calculations and final answer to 2 decimal places.) XL-D XLC Raw material Direct labor - Production Direct labor - Assembly Overhead Total Required B > Required: . 3C's current cost accounting system charges overhead to products based on direct labor cost using a single plantwide rate wat product costs will it report for the two products if the current location system is used? b. The controller recently completed an executive education course describing the two-stage alocation procedure Assume that the Tirst stage allocates costs to departments and the second stage allocates costs to products. The controller believes that the costs we be more accurate if machine hours are used to allocate Production Department costs and tabor hours are used to allocate Assembly Department costs What product costs will be reported for the two products of the two-stage allocation process is used? d. The president argues that an activity based costing system would provide even better costs. The company decides to compute product costs assuming an ABC system is implemented only in the Production Department. Overhead in Assembly will continue to be allocated based on direct for hours. The cost drivers selected for the activity based costing system are as follows Overhead te Driver Supervision Direct Labor. hours Material handling Material cost Testing Testing hours Wastewater treatment Wastewater generated Depreciation on equipsent Machine hours Shipping Weight What product costs would be reported if this ABC system were implemented? Assume that the production mix and costs would remain as originally planned Complete this question by entering your answers in the tabs below. Required A Required B Required The controller recently completed an executive education course describing the two-stage allocation procedure. Assume that the first stage allocates costs to departments and the second stage allocates costs to products. The controller believes that the costs will be more accurate if machine-hours are used to allocate Production Department costs and labor hours are used to allocate Assembly Department costs. What product costs will be reported for the two products if the two-stage allocation process is used? (Round your intermediate calculations and final answer to 2 decimal places) XLD XLC Raw material Direct labor - Production Direct labor - Assembly Overhead - Production Overhead - Assembly Total Required: a. 3C's current cost accounting system charges overhead to products based on direct labor cost using a single plantwide rate. What product costs will it report for the two products if the current allocation system is used? b. The controller recently completed an executive education course describing the two-stage allocation procedure. Assume that the first stage allocates costs to departments and the second stage allocates costs to products. The controller believes that the costs will be more accurate it machine hours are used to allocate Production Department costs and labor hours are used to allocate Assembly Department costs What product costs will be reported for the two products of the two-stage allocation process is used? d. The president argues that an activity based costing system would provide even better costs. The company decides to compute product costs assuming an ABC system is implemented only in the Production Department. Overhead in Assembly will continue to be allocated based on direct latior hours. The cost drivers selected for the activity based costing system are as follows Overhead Iter Orie Supervision Direct Labor hours Material handling Material cost Testing Testing hours Mesteater treatment Mostrwater generated Depreciation on wipent Machine hours Shipping Weight What product costs would be reported it this ABC system were implemented? Assume that the production mix and costs would remain as onginally planned Complete this question by entering your answers in the tabs below. Required Required Required What product costs would be reported in this ABC system were implemented? Assume that the production mix and costs would remain as originally planned. (Round your intermediate calculations and final answer to 2 decimal places) XL-D XLC Raw material Direct labor - Production Direct labor-Assembly Overhead - Production Supervision Material handing Testing Waste treatment Depreciation Shipping Total production overhead