Churchill Products is considering updating its cost system to an activity-based costing system and is Interested in understanding the effects. The company's cost accountant has Identified three overhead cost pools along with appropriate cost drivers for each pool. Cost Pools Utilities Scheduling and setup Material handling Costs $310, cee 280,00 800,000 Activity Drivers 62,eee machine-hours 568 setups 1,600,000 pounds of material The company manufactures three models of water basins (Oval, Round, and Square). The plans for production for the next year and the budgeted direct costs and activity by product line are as follows. Oval $ 80, 30,000 Total direct costs (material and labor) Total machine-hours Total number of setups Total pounds of material Total direct labor-hours Number of units produced Products Round $90,000 12,000 280 310,000 2,eee 2,000 Square $ 90,000 2e.ee 200 760,000 5, eee 6,000 530,000 3,000 3,600 Required: a. The current cost accounting system charges overhead to products based on direct labor-hours. What unit product costs will be reported for the three products if the current cost system continues to be used? c. What are the cost driver rates for the three cost pools Identified by the cost accountant? d. What unit product costs will be reported for the three products of the ABC system suggested by the cost accountant's classification of cost pools is used? e. If management should decide to Implement an activity-based costing system, what benefits should it expect? Complete this question by entering your answers in the tabs below. Required A Required C Required D Required E The current cost accounting system charges overhead to products based on direct labor-hours. What unit product costs will be reported for the three products if the current cost system continues to be used? (Do not round intermediate calculations. Round "Per unit cost" answers to 2 decimal places.) Oval Round Square Total cost Per unit cost Required A Required C > Churchill Products is considering updating its cost system to an activity-based costing system and is Interested in understanding the effects. The company's cost accountant has Identified three overhead cost pools along with appropriate cost drivers for each pool. Cost Pools Utilities Scheduling and setup Material handling Costs $310, cee 280,00 800,000 Activity Drivers 62,eee machine-hours 568 setups 1,600,000 pounds of material The company manufactures three models of water basins (Oval, Round, and Square). The plans for production for the next year and the budgeted direct costs and activity by product line are as follows. Oval $ 80, 30,000 Total direct costs (material and labor) Total machine-hours Total number of setups Total pounds of material Total direct labor-hours Number of units produced Products Round $90,000 12,000 280 310,000 2,eee 2,000 Square $ 90,000 2e.ee 200 760,000 5, eee 6,000 530,000 3,000 3,600 Required: a. The current cost accounting system charges overhead to products based on direct labor-hours. What unit product costs will be reported for the three products if the current cost system continues to be used? c. What are the cost driver rates for the three cost pools Identified by the cost accountant? d. What unit product costs will be reported for the three products of the ABC system suggested by the cost accountant's classification of cost pools is used? e. If management should decide to Implement an activity-based costing system, what benefits should it expect? Complete this question by entering your answers in the tabs below. Required A Required C Required D Required E The current cost accounting system charges overhead to products based on direct labor-hours. What unit product costs will be reported for the three products if the current cost system continues to be used? (Do not round intermediate calculations. Round "Per unit cost" answers to 2 decimal places.) Oval Round Square Total cost Per unit cost Required A Required C >
