horngres cost accounting 8th edition chapter 5(question5-20)

ASSIGNMENT MATERIA terviews with the department personnel and examination of time records vield the following d information: Variable MOH in 2018 S 39,000 29,600 240,000 $308,600 Use of Cost Drivers by Customer United Holden Leland Motors Motors Motors 80 240 2.800 080 ment Cost Driver CAD design-hours Engineering-hours Machine-hours 110 70 120 200 60 ring g the simple costing system, compute the plantwide variable manufacturing overhead rate for 2018 the variable manufacturing overhead allocated to each contract in 2018. pute the variable manufacturing overhead rate for 2018 and the variable manufacturing overhead ated to each contract in 2018 using department-based variable overhead rates. ment on your answers in requirements 1 and 2. Which customer do you think was complaining t being overcharged in the simple system? If the new department-based rates are used to price acts, which customer(s) will be unhappy? How would you respond to these concerns? else might CP use the information available from its department-by-department analysis of vari- manufacturing overhead costs? nanagers are wondering if they should further refine the department-by-department costing sys- to an ABC system by identifying different activities within each department. Under what condi- vould it not be worthwhile to further refine the department costing system into an ABC system? Plantwide indirect cost rates. Car Parts (CP) designs, manufactures, and sells automotive parts. Actual variable manufacturing overhead costs for 2015 were $308,600. CP's simple costing system allocates variable manufacturing overhead to its three customers based on machine-hours and prices its contracts based on full costs. One of its customers has regularly complained of being charged non-competitive prices, so CP's controller, Devon Smith, realizes that it is time to examine the consumption of resources more closely. CP has three main operating departments: design, engineering, and production. Design-the design of parts, using state-of-the-art, computer-aided design (CAD) equipment Engineering-the prototyping of parts and testing of their specifications. Production-the manufacture of parts. Interviews with the department personnel and examination of time records yield the following detailed information Use of Cost Drivers by Customer United Holden Leland Variable MOH in 2015 Moters MotorsMotors Department Cost Driver CAD design-hours 39.000 Engineering-hours 29600 Design 80 240 240,000120 2,800 1,080 110 70 200 60 Engineering Productiorn Machine-hours Total Required 1. Using the simple costing system, compute the plantwide variable manufacturing overhead rate 308,600 for 2015 and the variable manufacturing overhead allocated to each contract in 2015. 2. Compute the variable manufacturing overhead rate for 2015 and the variable manufacturing overhead allocated to each contract in 2015 using department-based variable overhead rates. 3. 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 concems? 4. How else might CP use the information available from its department-by-department analysis of variable manufacturing overhead costs