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TDABC

Bob Russo, cost accounting manager for Hemple Products, was asked to determine the costs of the activities performed within the company's Manufacturing Engineering Department. The department has the following activities: creating bills of materials $($BOMs$),$ studying manufacturing capabilities, improving manufacturing processes, training employees, and designing tools. The resource costs $($from the general ledger$)$ and the times to perform one unit of each activity are provided below.

Resource Costs Activities Unit Time Driver

Salaries $$368,000$ Creating BOMs $0\mathrm{.}5$ hr$.$ No$.$ of BOMs

Equipment $84,000$ Designing tools $1\mathrm{.}9$ hrs$.$ No$.$ of tool designs

Supplies $38,000$ Improving processes $0\mathrm{.}9$ hrs$.$ Process improvement hrs$.$

Total $$490,000$ Training employees $2\mathrm{.}1$ hrs$.$ No$.$ of training sessions

Studying capabilities $2\mathrm{.}1$ hrs$.$ Study hours

Total machine and labor hours $($at practical capacity$)$:

Machine hours $2,000$

Engineering hours $18,000$

Total hours $20,000$

The activity, designing tools, uses the number of tools designed as the activity driver. Using a traditional approach, the cost of the designing tools activity was determined to be $$196,000$ with an expected activity output of $1,000$ for the coming year. During the first week of the year, two jobs $($Job $150$ and Job $151)$ had a demand for $10$ and $20$ new tools, respectively.

Required:

$1.$ Calculate the capacity cost rate for the Manufacturing Engineering Department. Round your answer to the nearest cent.

$fill in the blank $1$

per hour

$2.$ Using the capacity cost rate, determine the activity rates for each activity. Round your answers to the nearest cent.

Activity Rates

Creating BOMs $fill in the blank $2$

per BOM

Designing tools $fill in the blank $3$

per tool design

Improving processes $fill in the blank $4$

per process improvement hr$.$

Training employees $fill in the blank $5$

per training session

Studying capabilities $fill in the blank $6$

per study hour

$3.$ Calculate the cost of designing tools that would be assigned to each job using the TDABC$-$derived activity rate and then repeat using the traditional ABC rate.

Job $150$ Job $151$

TDABC $fill in the blank $7$

$fill in the blank $8$

ABC $fill in the blank $9$

$fill in the blank $10$

$4.$ Now suppose that time for creating BOMs is $0\mathrm{.}5$ for a standard product but that creating a BOM for a custom product adds an additional $0\mathrm{.}3$ hour. Express the time equation for this added complexity. Round your answers to two decimal places. Place the amounts left to right, lowest to highest.

BOM time $=$ fill in the blank $11$

$+$ fill in the blank $12$

Calculate the activity rate for the activity of creating a BOM for custom products. Round your answer to the nearest cent.

$fill in the blank $13$

per BOM