case 2 Cases for Management Decision Making Greet CA-9 The final activity is framing and matting. The expected overhead costs re- lated to framing and matting are $123,900. None of this overhead cost should be allocated to unframed prints. The costs related to framing and matting are rela- tively fixed because the costs relate to equipment and other costs that do not vary with sales volume. As a consequence, like website optimization, you chose to base the cost driver on levels at operating capacity, rather than at the expected sales level. The cost driver is the number of have two components (the print and frame), and wood-framed prints have three components (the print, mat, and frame). The total components at operating ca- pacity would be steel frame 32,000 or (16,000 2) and wood frame 27,000 or (9,000 x 3,000). prints llustration CA 2-4 Information for activity4 Estimated Overhead $123.900 Expected Use of Cost Driver Cost Driver Framing and Number of Pint and frame: 16,0002 lequipment,onents insurance, rent, matting cost at capacity Print, mat, and frame: 9,000 x -27,000 components at at capacity and supervisory capacity To summarize, the overhead costs and cost drivers used for each product are expected to be Blustration CA 2-5 Steel- Woed- Framed, Framed Summary of overhead costs and cost drivens with Cost Driver Unframed Total Cost 1. Picking Number of selection and Number of80000 Number of prints at Number of 80,000 15,000 7,0 102,000 $ 30,600 2. Inventory Number of 80,000 30,000 21,000 131000 91,700 00,000 25,800 3. Website optimization 16,000 9,000 25,000 103,200 4. Framing and components at capacity 2,000 27000 59,000 123,900 $375,200 Answer the following questioEs 1. Identify two reasons why an activity-based costing system may be appropriate for Wall Dcor 2. Compute the activity-based overhead rates for each of the four activities 3. Compute the product cost for the following three items using ABC. (Review Case 1 for additional information that you will need to answer this question) (a) Lance Armstrong unframed print (base cost of print $12) (b) John Elway print in steel frame, no mat (hase cost of print S16). (c) Lambeau Field print in wood frame with mat (hase cost of print $20)