College Supply Company (CSC) makes three types of drinking glasses: short, medium, and tall it presently applies overhead using a predetermined rate based on direct labor hours. A group of company employees recommended that CSC switch to activity-based costing and identified the following activities, cost drivers, estimated costs, and estimated cost driver units for Year 5 for each activity center Activity Setting up production Processing orders Handling materials Using machines Providing quality management l'acking and shipping Hecommended Cost Driver Number of production runs Number of orders Pounds of materials Machine hours Number of inspections Units shipped Cost $ 33,600 52,800 18,000 70,000 56,000 40,000 $270,400 Estimated cost Drive Units 120 runs 220 orders 9,800 pounds 10,000 hours 10 inspections 20,000 units 5 5. In addition, management estimated 2,000 direct labor hours for year Assume that the following cost driver volumes occurred in February, year 5 Short 1,200 $3,000 100 Medium 500 53,000 110 Tall 400 $2,500 100 Number of units produced Direct naterials costs Direct labor-hours Number of orders Number of production runs Pounds of material Machine-hours Number of inspections Units shipped 2 300 500 3 1,200 4 900 400 2 50 200 300 2 300 Direct labor costs were $20 per hour Direct labor costs were $20 per hour. Required: a. Compute a predetermined overhead rate for year 5 for each cost driver recommended by the employees. Also compute a predetermined rate using direct labor-hours as the allocation base. b. Compute the production costs for each product for February using direct labor-hours as the allocation base and the predetermined rate computed in requiremento. c. Compute the production costs for each product for February using the cost drivers recommended by the employees and the predetermined rates computed in requiremento (Note: Do not assume that total overhead applied to products in February will be the same for activity based costing as it was for the labor hour based allocation) Complete this question by entering your answers in the tabs below. Required Required B Required Compute a predetermined overhead rate for years for each cost driver recommended by the employees. Also computer a predetermined rate using direct labor hours as the allocation base. (Round your answers to 2 decimal places.) Allocation Rate per un per order Activity Setting up production Processing orders Handling materials Using machines Performing quality management Packing & Shipping Direct labor hour rate perib per hour perinis per unit por hour predeter b. Compute the production costs for each product for February using direct labor-hours as the rate computed in requirement a. c. Compute the production costs for each product for February using the cost drivers recomme predetermined rates computed in requirement a. (Note: Do not assume that total overhead app same for activity-based costing as it was for the labor-hour-based allocation.) Complete this question by entering your answers in the tabs below. Required A Required B Required c Compute the production costs for each product for February using direct labor-hours as the allocat predetermined rate computed in requirement a. (Do not round intermediate calculations.) Tall Short Medium 3,000 $ 3,000 $ $ $ 2,500 Direct materials Direct labor Overhead Total costs Required A Required B Required c Compute the production costs for each product for February using the cost drivers recommended predetermined rates computed in requirement a. (Note: Do not assume that total overhead applie will be the same for activity-based costing as it was for the labor-hour-based allocation.) (Do not calculations.) Medium Short 3,000 $ Tall 2,500 $ 3,000 $ Direct materials Direct labor Setting up production Processing orders Handling materials Using machines Performing quality management Shipping Total costs
