Company (RC designs Haadster and produces autemotve parts. In 201, acual varlabla manufacburing ovemead is 5240,00D HC'SSImple coating system alocatas varlabla manufacturing cwerad to hs three customars based on machine-hours and prices ts contracts basad on ull costs Una ct Its customars has ragularty comp ared of eing charged n noor pet ve prices. 5 controle uncan um 'eatzes it s rne o examre ve o nsumption over ead resources more ose knows ere 8re tree mem deptr n nts a consume ov r esd resources es san, producti r BMd en r er ng. terviev , partment parsonnel andxmiation at sme racards yleld tha tol owing detaled intomation: Click the icon to vicw the informaon.) Read the rimen Requirement 1.Compute th aufacturig overhead alocated to csch cuztomer ih 2017 uaing the simple cosing syatem shat ues machine hours sa the allccaion bae Delemine the formula neded to calulate overhead using e simple cating method and then celolate RC manufacturing overheadate for 2017(Rond your answe to te nerast cent) Manufacturing overhcad rat par machine hour Calculate the overhead allocated to cach cuatomer uaing the imple cotng acomer uaing the g method. Round your anawers to the nearest whole dollar) MuchineOveread Hours Used Allocated Customer Pacific Motors agean Mator Jain Auto Requirement 2. Compute the manufacturing overhead allocated to each customer in 2017 using department-based manufacturing overhead rates. (Abbreviations used: DeptDepartment.) Determine the formula used to calculate the department-based manufacturing overhead rates: Manufacturing overhead rate by d RC's 2017 manufacturing overhead rates by department are as follows Manufacturing Overhead Rate Department Design Engineering Production (by Department) per per per Cal late te overhead Allocated 0 stone by dapa ment using the de art mental menutac u ing ove ead rates calculated in the previous stap Calculate the total o erh cos toraach department and each customer Pacific AcgeanJarrin Auto Motors Motors Total Design Enginaaring Production Total Requirement 3 om men on your answers In requre en s Under tha simple-casting sysam, and 2 hich ous was comp aining about ben overchar e em ? he new department-based ra es are used o nce con ract which custom ens w be un appy? How would you respond to these concerns mer o you n e sm e was likaly unhappy about thairbil bacause the contract appears to hava haan If the naw dapartment-hasad ranas ara usad to prics contracts,y ba happlar about their bll w kely be unhapey This s because their bils under the simple-costing system appear to hane beenUsing he depantmentbased tes Thair bils wil H the new department-besed ratee are used to price contracts if the new department-based rates are used. RC should explain to unhappy customers how the calculation wes doe, and point out thei high use of 7relaive to Requirement 4. How else might RC use the information available from its department-by-department analysis of manufacturing overhead costs? (Select all that apply.) Other than for pricing, RC can also use the information from the department-based system A. to examine and streamline its own operations so that there is maximum value-added from all indirect resources B. to set targets over time to reduce both the consumption of each indirect resource and the unit costs of the resources C. to reevaluate employee pay scales. D. to provide incentives to professional staff. 1 Compute the manufacturing overhead allocated to each customer in 2017 using the simple costing system that uses machine-hours as the allocation base Compute the manufacturing overhead allocated to each customer in 2017 using department-based manufacturing overhead rates Comment on your answers in requirements 1 and 2. Which customer do you think was complaining about being overcharged in the simple system? If the new department-based rates are used to price contracts, which customer(s) will be unhappy? How would you respond to these concerns? How else might RC use the information available from its department-by-department analysis of manufacturing overhead costs? RC's managers are wondering if they should further refine the department-by-department costing system into an ABC system by identifying different activities within each department. Under what conditions would it not be worthwhile to further refine the department costing system into an ABC system? 2. 3. 4. 5