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 Packing and shipping Recommended Cost Driver Number of production runs Number of orders Pounds of materials Machine hours Number of inspections Units shipped Estimated Cost $ 28,000 43,200 14,000 48,000 56,000 42.000 $231,200 Estimated cost Driver Units 100 runs 180 orders 7,000 pounds 8,000 hours 40 Inspections 21,000 units In addition, management estimated 2,000 direct labor-hours for year 5 Assume that the following cost driver volumes occurred in February, year 5. Number of units produced Direct materials costs Direct labor-hours Number of orders Number of production runs Pounds of material Machine-hours Number of inspections Short 1,600 54,000 110 9 3 500 500 2 Medium 400 $3,000 110 8 4 BOG 200 2 Tall 400 $2,000 110 3 9 300 1400 2 Number of units produced Direct materials costs Direct labor-hours Number of orders Number of production runs Pounds of material Machine-hours Number of inspections Units shipped Short 1,000 $4,000 110 9 3 500 500 2 1,000 Medium 400 $3,000 110 8 4 800 200 2. 400 Tall 400 $2,080 110 3 9 300 400 2. 300 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 requirement a c. Compute the production costs for each product for February using the cost drivers recommended by the employees and the predetermined rates computed in requirement a. (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. Pudin Donald Complete this question by entering your answers in the tabs below. Required A Required Required Compute a predetermined overhead rate for years for each cost driver recommended by the employees. Also compute a predetermined rate using direct labor hours as the allocation base. (Round your answers to 2 decimal places.) Activity Allocation Rote Setting up production per run Processing orders per order Handling materials Using machines per hour Performing quality management per insp Packing & shipping Direct labor hour rate per lb per unit per hour Required B > Complete this question by entering your answers in the tabs below. Required A Required B Required Compute the production costs for each product for February using direct labor-hours as the allocation base and the predetermined rate computed in requirement a. (Do not round intermediate calculations.) Tall Short Medium 4.000 $ 3.000 $ $ 2000 Direct materials Direct labor Overhead Total costs $ 4.000 $ 3.000 $ 2.000
