Check my work Required information The following information applies to the questions displayed below.) Part 1 of 5 128 Kitchen King's Toledo plant manufactures three product lines, all multi-burner, ceramic cook tops. The plant's three product models are the Regular (REG), the Advanced (ADV), and the Gourmet (GMT). Until recently, the plant used a job-order product-costing system, with manufacturing overhead applied on the basis of direct-labor hours. The following table displays the basic data upon which the traditional costing system was based. points Book Print 40 runs 40 runs References planned annual production: Volume in units Production runs Direct material Direct labor! (not including setup) Machine hours (MH) per product unit Total MR consused by product line in a year 5,000 125 units $129 $171 $19 / hr.) 4,000 100 units $151 $209 $19/hr.) 1.000 20 runs 50 units $203 $247 (13 hrs. $19/hr.) (9 hrs. (11 hrs. 10 MH 50,000 (10 MHM 5.000) 12 MH 48.000 (12 MH M 4,000) 17 MH 17,000 (17 MIN 1.000) The annual budgeted overhead is $1,224,000, and the company's predetermined overhead rate is $12 per direct labor hour. The product costs for the three product models, as reported under the plants traditional costing system, are shown in the following table. Check my work The annual budgeted overhead is $1,224,000, and the company's predetermined overhead rate is $12 per direct-labor hour. The product costs for the three product models, as reported under the plant's traditional costing system, are shown in the following table. ADV Direct material Direct labor (not including setup) Manufacturing overhead Total REG $129.00 171.00 (9 hr. @ $19) 108.00 (9 hr. @ $12) $408.00 $151.00 209.00 (11 hr. @ $19) 132.00 (11 hr. $12) $492.00 GMT $203.00 247.00 (13 hr. @ $19) 156.00 (13 hr. @ $12) $606.00 Kitchen King's pricing policy is to set a target price for each product equal to 130 percent of the full product cost. Due to price competition from other appliance manufacturers, REG units were selling at $525, and ADV units were selling for $628. These prices were somewhat below the firm's target prices. However, these results were partially offset by greater-than-expected profits on the GMT product line. Management had raised the price on the GMT model to $800, which was higher than the original target price. Even at this price, Kitchen King's customers did not seem to hesitate to place orders, Moreover, the company's competitors did not mount a challenge in the market for the GMT product line. Nevertheless, concern continued to mount in Toledo about the difficulty in the REG and ADV markets. After all, these were the plant's bread-and-butter products, with projected annual sales of 5,000 REG units and 4,000 ADV units. Kitchen King's director of cost management, Angela Ramirez, had been thinking for some time about a refinement in the Toledo plant's product-costing system. Ramirez wondered if the traditional, volume-based system was providing management with accurate data about product costs. She had read about activity based costing, and wondered if ABC would be an improvement to the plant's product-costing system. After some discussion, an ABC proposal was made to the company's top management, and approval was obtained. The data collected for the new ABC system is displayed in the following table. Activity Machine related Activity Cost Pool $310,500 Cost Driver Machine Hours Product Line REG Cost Driver Quantity for Product Line 50,000 48,000 17,000 115,000 ADV GMT Material handling 52,500 Production Runs Total REG ADV GMT Purchasing 75,000 Purchase Orders 104 300 Setup 85,000 Production Runs TTTTT 40 40 Total REG ADV GMT Total REG ADV GMT Total REG ADV GMT Total REG ADV GMT Total 20 Inspection 27,500 Inspection Hours 100 400 400 300 1,100 Shipping 66,000 Shipments 500 400 200 1,100 ADV GMT Total REG Engineering 32,500 Engineering Hours ADV GMT 400 200 1,100 250 200 200 650 50,000 48,000 17,000 115,000 Total Facility 575,000 Machine Hours REG ADV GMT Total Required: 1. Show how the company's overhead rate of $12 per direct-labor hour was calculated. hours per direct labor hour Predetermined overhead rate 2. Complete an activity-based costing analysis for Kitchen King's three product lines. (Round "Pool Rate" and "Activity Cost per Unit of Product" to 2 decimal places.) Activity Activity Cost Pool Cost Driver Cost Driver Quantity Pool Rate Product Line Cost Driver Quantity for Product Line Activity Cost for Product Line Product L Producti Volum Machine related $ 310,500 Machine hours 50,000 48,000 17,000 115.000 401 Material handling 52,500 Production runs 401 20 100 100 Purchasing 75,000 Purchase orders REG ADV GMT Total REG ADV GMT Total REG ADV GMT Total REG ADV GMT Total REG ADV 104 300 85.000 Production runs &&&8 Inspection 27,500 Inspection hours Required information Setup 85,000 Production runs REG ADV GMT Total REG ADV Inspection 27,500 Inspection hours GMT Total 40 201 100 400 400 300 1,100 500 400 2001 1,100 250 Shipping 66,000 Shipments Engineering 32,500 Engineering hours 200 REG ADV GMT Total REG ADV GMT Total REG ADV GMT Total Grand total 200 650 Facility 575,000 Machine hours 50.000 48,0001 17,000 115.000 3. Complete the table given below to calculate the new product cost for each product line under ABC. (Round your intermediate calculations and final answers to 2 decimal places.) REG A DV GMT Direct material Direct labor Total direct costs per unit Manufacturing overhead: Machine-related Material handling Purchasing Setup Inspection Shipping Engineering Facility Total ABC overhead cost per unit Total product cost per unit 4. Complete the table given below to compare the overhead cost, total product cost, and target price for each product line under the two alternative costing systems. (Round your intermediate calculations and final answers to 2 decimal places.) REG A DV GMT Reported unit overhead cost: Traditional, volume-based costing system Activity-based costing system Reported unit product cost (direct material, direct labor and overhead): Traditional, volume-based costing system Activity-based costing system Sales price data: Original target price (Based on traditional, volume-based costing system) New target price (Based activity-based costing system) Actual current selling price 5. Was each of Kitchen King's three product lines overcosted or undercosted? By how much per unit? (Round your intermediate calculations and final answers to 2 decimal places.) REG per unit per unit ADV GMT per unit