Can you guys explain to me how did this professor got that numbers??

Question

Professor's answer

using three cost pools and have come up with the following information based on last yea situation: Activity Cost Pool Cost Driver Production Setups #of setups Scrap/rework # of scrap rework orders Machine costs machine hours Last year's Costs $200,000 400,000 250,000 $850,000 Last year's activity Regular Model Customized Model Sales = 10,000 units Sales = 500 units Total Activity levels #of Production Setups # of Scrap/rework orders # Machine hours 12 500 10,000 500 100 1000 512 600 11,000 Approximate amount of Overhead allocated last year using the current approach: Regular $772,727 Customized 77,273 $850,000 Required: 1. Using the information provided above based on last year's information, calculate the based cost driver rates for each of the three pools. Round your answers to two decim 3. Using the ABC information as the standard (i.e., the correct amount), determine the percentage amount that the present overhead allocation approach has over or under costed each product (1 mark) 1 $772,727 $207,434 overallocated 37% 77,273 -$207,434 under allocated -73% Mirabel Co. For many years Mirabel Company only manufactured and sold a regular model. However, the company saw an opportunity in the marketplace and decided to begin manufacturing and selling a customized model. Sales of the regular model have held steady at 10.000 units per year over the last five years whereas sales of the customized product have approximately doubled each year. Last year, sales of the customized model were 500 units. However, despite the fact total sales have been increasing, the company's overall gross margin has been shrinking. The President attributed this to the fact that the gross margin for the regular product has shrunk considerably from what it was five years ago. Upon viewing the latest financial reports, the president of Mirabel exclaimed: Thank god we introduced the customized product when we did. We'd be losing our shirt if we hadn't. We better start emphasizing the customized product more and de.. emphasizing sales of the regular product. As a newly hired manager in the company, you pondered this situation and thought you should do an investigation based on an ABC analysis - something you learned in MGT 2400. You determine that total manufacturing overhead is a significant component of total product cost and has been growing over the years. The company currently allocates manufacturing overhead on the basis of machine hours. Finally, you believe that the overhead might be better allocated using three cost pools and have come up with the following information based on last year's. situation