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I already did the calculations I just need the qualitative questions answered. Calculate Activity Cost Pools for each activity. Explain how each cost pool can
I already did the calculations I just need the qualitative questions answered.
- Calculate Activity Cost Pools for each activity.
- Explain how each cost pool can be interpreted in terms of how costly each overhead activity is.
- Calculate Activity Rates for each activity cost pool.
- Explain how each rate can be interpreted in terms of how costly each activity is.
- Comment on the strengths and weaknesses of Mr. Stephens' selection of cost drivers. Identify several theoretical alternatives, and comment on their validity.
- Using the direct labor hour-based manufacturing overhead rate to calculate and assess the profitability of each product line.
- Using the Activity Rates you derive above using Mr. Stephens' cost drivers, re-calculate the average unit product margin for the Custom Design and Standard Design fuel pressure regulators.
- Compare the product margins using activity-based costing with those calculated using the status quo method. Comment on the accuracy of each estimate.
- Which method would you recommend Mr. Stephens use for establishing a selling price for new orders? Why?
- Strategically, comment on whether Mr. Stephens should promote the sales of Custom Designs or Standard Design fuel pressure regulators. Explain your rationale.
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