Exercise 1 (4 points) Potter Corporation has gained considerable market share in recent years for its specialty, low-volume, complex line of products, but the gain has been offset by a loss in market share for its high-volume, simple line of products. This has resulted in a net decline in its overall profitability. Advise management about specific changes that may be required in its cost accounting system and explain why the existing system may be inadequate.

Exercise 2 (6 points) Sigma Company produces three versions of a brass desk lamp: basic, custom, and deluxe. The planned production information for the upcoming month follows: Resources Cost per Month Fringe Benefits Total Hours per Month Direct labor $4,270 $1,000 $5,270 150 Indirect labor cost $4,210 $800 5,010 150 Machinery $70,000 $70,000 250 Basic Custom Deluxe Selling price per unit $200 $220 $530 Direct materials cost per unit $60 $70 $85 Production Information Basic Custom Deluxe Production and sales volume (units) 4,500 3,200 1,200 Direct labor hours per unit 2.00 2.50 3.00 Total direct labor hours 9,000 8,000 3,600 Machine hours per unit 0.05 0.08 0.09 Total machine run time (hours) 225 256 108 Number of production runs 12.00 10.00 8.00 Setup time per production run (machine hours) 2.00 1.00 2.50 Total setup time (machine hours) 24.00 10.00 20.00 Total machine hours 249 266 128 Indirect labor data Setup time per run (hours) 3.00 4.00 6.00 Number of employees per setup 4 4 4 Indirect labor hours per setup 12.00 16.00 24.00 In order to meet anticipated demand for the upcoming month, Sigma Company plans to rent three machines, each costing $70,000 per month, and hire four indirect workers, each costing $5,010 per month. The total cost of the three machines and four indirect workers comprises the total overhead cost at Sigma Company. Required a. Given the production plan, what is the deluxe products planned total contribution margin? b. If Sigma Company computes a plantwide rate to allocate total overhead cost to the three products by dividing the sum of indirect labor cost and machine cost by planned total direct labor hours, what is the total overhead cost that will be allocated to the deluxe product, and what will be its resulting gross margin? c. If Sigma Company uses TDABC to allocate the indirect labor cost and the machine cost to the three products, what will be the total overhead cost allocated to the deluxe product, and what will be its resulting gross margin?

Resources	Cost per Month	Fringe Benefits	Total	Hours per Month
Direct labor	$4,270	$1,000	$5,270	150
Indirect labor cost	$4,210	$800	5,010	150
Machinery	$70,000		$70,000	250
	Basic	Custom	Deluxe
Selling price per unit	$200	$220	$530
Direct materials cost per unit	$60	$70	$85

Production Information	Basic	Custom	Deluxe
Production and sales volume (units)	4,500	3,200	1,200
Direct labor hours per unit	2.00	2.50	3.00
Total direct labor hours	9,000	8,000	3,600
Machine hours per unit	0.05	0.08	0.09
Total machine run time (hours)	225	256	108
Number of production runs	12.00	10.00	8.00
Setup time per production run (machine hours)	2.00	1.00	2.50
Total setup time (machine hours)	24.00	10.00	20.00
Total machine hours	249	266	128
Indirect labor data
Setup time per run (hours)	3.00	4.00	6.00
Number of employees per setup	4	4	4
Indirect labor hours per setup	12.00	16.00	24.00

Please solve each exercise in an excel spreasheet

Exercise 3 (6 points) Halifax Brass Company manufactures pumps and valves and uses a TDABC system. Last year, Halifax recorded the following data for assigning manufacturing overhead costs to its products: Unit cost estimates (Rates per Hour Total Unit Time Estimates (Hours Assigned to Products) Practical Capacity not Assigned to Products (Hours) Pumps Valves Machine setups and run time $25.00 per machine hour 1,500 1,800 300 Labor for setups, receiving, and packing $40.00 per labor hour 5,000 6,000 200 Selling, general and administrative expenses $100.00 per engineering hour $200 400 50 Halifax also developed the following information on revenues and costs other than manufacturing overhead. Total revenues $980,000 Total direct labor cost $210,000 Total direct materials cost $90,000 Selling, general and administrative expenses $100,000 Required a. Using the companys TDABC system, how much manufacturing overhead cost will be assigned to pumps? How much will be assigned to valves? b. What is the companys net income? (Assume the company sells the entire amount of the products it produces).

Exercise 4 (4 points) CAN Company sells multiple products and uses a TDABC system. The companys products must be wrapped individually before shipping. The packaging and shipping department employs 30 people. Each person works 22 days per month on average. Employees in this department work an 8-hour shift that includes a total of 60 minutes for breaks and a meal. The full compensation, including fringe benefits, for each packaging and shipping employee is $3,850 per month. Required a. Using the principles discussed in this chapter and TDABC, what is the rate per hour for each packaging and shipping employee at CAN? b. On average, it takes one packaging and shipping employee 15 minutes to prepare a package and label, independent of the number or types of items in the shipment, plus 6 minutes per item to bubble wrap and pack it in the carton. Using CANs TDABC system, what is the packaging and shipping cost assigned to order 705, which consisted of 50 items?