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California Circuits Company (3C) manufactures a variety of components. Its Valley plant specializes in two electronic components used in circuit boards. These components serve the

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California Circuits Company (3C) manufactures a variety of components. Its Valley plant specializes in two electronic components used in circuit boards. These components serve the same function and perform equally well. The difference in the two products is 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 Originally, 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. While the equipment is fully depreciated annual operating expenses of $258.000 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-D 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 their 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 XL. and is currently trying to decide its fate Manufacturing of both components begins in 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 Units produced Raw material costs per unit Direct labor-hours per unit-Production Direct labor-hours per unit-Assembly Direct Labor rate per hour-all Labor Machine-hours per unit-Production Machine-hours per unit-Aseably Testing hours per unit (all in production) Shipping weight per unit (pounds) Wastewater generated per unit (gallons) XL-D 100,000 $12.80 0.1 0.4 $24.00 116 XL 25,000 514.80 0.1 04 324.00 1.6 6.4 . 1.6 00 3.0 1.0 10.0 Annual overhead costs for the two departments follow Assembly Department $948.000 44.000 Supervision Material handling Testing Wastewater treatment Depreciation on equipment Shipping Total Production Department $100,000 97,000 158,000 258,000 405,000 7.000 $1,036,00 105,000 128.000 3528,000 The company president believes that it's foolish to continue producing two essentially equivalent products. At the same time, the corporate image is somewhat tarnished because of a toxic dump 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: 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 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 an 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 Wastewater treatment Wastewater generated Machine-hours Depreciation on equipment 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 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 used (Round Overhead percentage to the nearest whole percent and other intermediate calculations and final answer to 2 decimal places Check my we Overhead Ites Supervision Material handling Testing Wastewater treatment Depreciation on equipment Shipping Driver Direct Labor-hours Material cost Testing hours Wastewater generated Machine-hours 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 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.) XLD XLC $ $ 0.00 000 Raw material Direct labor - Production Direct labor - Assembly Overhead Total 0.00 $ $ 000 Required B > 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 D 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 cost to products. The controller belleves that the costs will be more accurate if machine-hours are used to allocate Production Department costs and labor hours are used to allocate Arsembly Department costs What product costs will be reported for the two products the two stage allocation provo lo used? (Round your intermediate calculations and finanswer to decimal places Show less XUD xud 0.00 000 Raw material Disclabor Production Direct lobor- Assembly Overhead Production Overhead - Assembly Total 000 0.00 0.00 000 $ Complete this question by entering your answers in the tabs below. Required A Required B Required D What product costs would be reported if 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 0.00 0.00 Raw material Direct labor - Production Direct labor - Assembly Overhead - Production Supervision Material handling Testing Waste treatment Depreciation Shipping Total production overhead 0.00 0.00 Overhead - Assembly Total $ 0.00 $ 0.00 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 D 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 cost to products. The controller belleves that the costs will be more accurate if machine-hours are used to allocate Production Department costs and labor hours are used to allocate Arsembly Department costs What product costs will be reported for the two products the two stage allocation provo lo used? (Round your intermediate calculations and finanswer to decimal places Show less XUD xud 0.00 000 Raw material Disclabor Production Direct lobor- Assembly Overhead Production Overhead - Assembly Total 000 0.00 0.00 000 $ Complete this question by entering your answers in the tabs below. Required A Required B Required D What product costs would be reported if 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 0.00 0.00 Raw material Direct labor - Production Direct labor - Assembly Overhead - Production Supervision Material handling Testing Waste treatment Depreciation Shipping Total production overhead 0.00 0.00 Overhead - Assembly Total $ 0.00 $ 0.00

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