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 $ 30,000 52,000 18,000 66,000 56,000 36.000 $259,000 Estimated Cont Driver Unit 100 runs 200 orders 9,000 pounds 11,000 hours 40 inspections 18,000 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. Medium 500 $2,500 110 Tall 500 $2.000 110 Number of unit produced Direct materials conte Direct labor-hours Number of orders Number of production runs Pounds of material Machine-hours Number of spections Units shipped Short 1,100 $5,000 90 8 2 400 500 3 1.100 5 900 300 2 500 17 100 309 600 VIA 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. Required A Required B Required C 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 your answers to 2 decimal places.) Activity Allocation Rate Setting up production per un Processing orders per order Handling materials perib Using machines Performing quality management per insp Packing & shipping Direct labor hour rate per hour per hour per unit b. Compute the prodqction 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. 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.) Direct materials Short Medium 5,000 $ 2.500 5 Tall 2.000 Direct labor Overhead Total costs www 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. Required A Required B Required 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 Medium Tall Direct materials $ 5,000 $ 2,500 $ 2,000 Direct labor Setting up production Processing orders Handling materials Using machines Performing quality management Shipping Total costs
