College Supply Company (CSC) makes three types of drinking glasses: short, medium, and tail. 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 $36, 6,00 24,000 72.000 80,000 48,000 $3,000 Estimated cost Drived Units 180 runs 200 orders 8,000 pounds 10,000 hours 40 inspections 20,000 units In addition, management estimated 2,000 direct labor-hours for years Assume that the following cost driver volumes occurred in February year 5 Nunber of units produced Direct materials costo Direct labor-hours Number of orders Number of production runs Pounds of material Machine hours Number of inspections Units shipped Short 1,000 $6,000 100 8 2 400 Medium TO 500 400 $3,750 1.000 120 110 8 4 300 200 300 2 12 500 300 500 300 2 1.000 Direct labor costs were $30 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 requirements 2. compute the production costs for each product for February using the cost des recommended by the employees and the predetermined fates.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 A Required B Required 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. (Round "Using machines" and "Packing & shipping" answers to 2 decimal places.) Allocation Rate per run Activity Setting up production Processing orders Handling materials Using machines Performing quality management Packing & shipping Direct labor-hour rate per order per lb per hour per insp per unit per hour Re 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 6,000 $ 3,750 $ 3,000 Direct materials Direct labor Overhead Total costs 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 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.) (Do not round intermediate calculations.) Show less Short Tall Medium 3,750 $ $ 6,000 $ 3,000 Direct materials Direct labor Setting up production Processing orders Handling materials Using machines Performing quality management Shipping Total cost
