If someone could help answer the questions I got wrong that would be great.
Product Costing: Company-wide Overhead Versus ABC LaMesa produces machine parts manufacturing company. LaMesa produces two particular parts, shafts and gears. The competition is keen among contract producers, and LaMesa's top management realizes how vulnerable its market is to cost-cutting competitors. Hence, having a very accurate understanding of costs is important to LaMesa's survival. contract provider for a large as a LaMesa's president, Jose Rodriguez, has observed that the company's current cost to produce shafts is $21.35, and the current cost to produce gears is $12.36. He indicated to the controller that he suspects some problems with the cost system because LaMesa is suddenly experiencing extraordinary competition on shafts, but it seems to have a virtual corner on the gears market. He is even considering dropping the shaft line and converting the company to a one-product manufacturer of gears. He asked the controller, Felix Bernhardt, to conduct a thorough cost study and to consider whether changes in the cost system necessary. The controller collected the following data about the company's costs and various manufacturing activities for the are most recent month: Shafts Gears Production units 50,000 10,500 Selling price $31.86 $24.00 Overhead per unit (based on direct labor hours) $12.82 $6.10 Materials and direct labor cost per unit $8.53 $6.26 Number of production runs 10 20 Number of purchasing and receiving orders processed 40 100 Number of machine hours 12,750 6,000 Number of direct labor hours 25.000 2,500 Number of engineering hours 5.000 5,000 Number of material moves 40 50 The controller was able to summarize the company's total manufacturing overhead into the following pools: $30,000 Setup costs Machine cost 175,000 Purchasing and receiving costs 210,000 Engineering costs 200,000 Materials handling costs 90,000 Total $705,000 a. Calculate LaMesa's current company-wide overhead rate based on direct labor hours. Round rate to two decimal places. per direct labor hour $25.64 b. Verify LaMesa's calculation of overhead cost per unit of $12.82 for shafts and $6.10 for gears. Use rounded rate calculated above. Round per unit rate to two decimal places. Overhead Rate X Hours Units Per Unit + Shafts: $ 12.82 25.64 25,000 640,909.1 50.000 Gears: $ 25.64 $ 2,500 64,090.91 10,500 6.1 c. Calculate the manufacturing overhead cost per unit for shafts and gears using activity-based costing, assuming each of the five cost pools represents a separate activity pool. Round answers to two decimal places, if needed. Setup 1,000 Machine 6.36 Purchasing & receiving $ 1,500 Engineering $ 20 Materials handling 1,000 Use the most appropriate activity driver for assigning activity costs to the two products. Use rounded overhead rates calculated above for calculations below. Round cost answers to the nearest whole number, when needed. Round overhead cost per unit to two decimal places. Shafts Gears $ Setup 10,000 20,000 Machine 15,909 159,091 Purchasing 60,000 150,000 Engineering 100,000 100,000 Materials handling 50,000 40,000 Total ABC overhead cost $ 315,909 $ 389,091 Number of units produced 50,000 10,500 30.09 $ Overhead cost per unit 7.78
