Electric Car Co (ECC). currently manufactures two different types of fully electronic cars in 2021. Type 8Y is a large SUV whereas Type 8W will be the fastest car in the world with 10 rocket thrusters. ECC has decided to use ABC costing instead of traditional costing. The 2021 budget to manufacture these new types include manufacturing overhead of $126,920,760 which has been allocated on each products inspection hours. The expected prime costs of two new types are as follows:

Required: 1) Using the traditional method

i. Determine the companys predetermined overhead rate(s) applied

ii. Determine how much overhead was applied to Type 8Y

iii. Provide the MOH true up journal entry required for this method at the end of the year

2) Using the ABC method i.

Determine the companys predetermined overhead rate(s) applied

ii. Determine how much overhead was applied to Type 8Y

iii. Provide the MOH true up journal entry required for this method at the end of the year

Solve in Excel

Prime Costs Type 8Y $20,915 Type 8W $43,625 ECC's controller believes the traditional costing system may be providing misleading cost information. They have developed an analysis of the 2021 budgeted manufacturing-overhead costs shown in the following chart Activity Cost Driver Assembly Assembly hours Inspection Inspection hours Painting Gallons of paint Quality control Number of tests Total manufacturing-overhead cost Budgeted Activity 10,000 10,000 5,000 8,000 Budgeted Cost $63,460,000 $27.920,000 $22,850,000 $12,690,760 $126,920,760 Actual data regarding the 2021 manufacturing of the Type 8Y and the Type 8W is shown in the following table with a total MOH of $216,920,760 Type 8Y Type 8W Budgeted Sales (units) Assembly hours Inspection hours Paint Gallons Tests 2,222 767 767 383 612 555 2.955 2.955 1477 2364