I'm just not sure about my method of solution to this problem. The attach files provide the basic information about this problem. Hope you can help with it, thank you!

Here's what I think: according to the information, we can not use the simple plantwide overhead to compute the manufacturing overhead. It's nothing wrong with the cost driver-- direct labor hours. The reason is that this company doesn't just provide one product anymore and it needs two production operations for its new product. So it's better if we use department rate to apply the overhead.

Therefore, first of all ,we should adjust the applied rate, then by computing, I find that Lion Tamer is the one that doesn't earn profit instead of Bear Detector. It can be inferred that it takes time to cover the fixed costs of the machine.

So my answer to this problem is that by using the department rate, Bear Detector is more profitable than Lion Tamer and my recommendations is that if Lion Tamer still doesn't earn profit after some certain years, management may consider discontinuing it.

Whether or not the production Bear Detectors will be continued is partially based on the gross profit it earned last year. So before the evaluation of the profitability of Dart's two products, it's necessary to make a basic analysis and explanation of this case based on the information given, which is helpful for the decision-making and related measures. According to this case, at the beginning of its operation, Dart Products only produced one product--- a radar detector. The whole operation process was very simple: all they needed to do was to employ workers to finish the assembly using purchased components. Here, manufacturing overhead was a relatively small part of the overall production costs, and we can apply overhead with a plantwide rate. In this case, a more simple and convenient computation of costs is offered, which is also suitable for the situation. However, the plantwide rate was of little use when the company started to produce the second product involving both labor- and machine-intensive operations. The production of Bear Detector remains the same, but to finish the production of Lion Tamer, direct materials need the further processing in two departments. Referring to the materials in Module 18, we can find that only when a company produces just one product or multiple products are similar concerning the activity level that drives most of the overhead costs will the plantwide overhead allocation method is used. Since the company produces two different products in different production departments, departmental overhead rate instead of plantwide rate will produce a more authentic assignment of overhead costs to these two products. From the last year's financial report, we can notice that the management of the company has already refined the assignment of production cost by introducing direct materials and labor. As for the manufacturing overhead: Bear Detector Lion Tamer Direct labor $150,000 $45,000 Labor rate $15 per hour $15 per hour Direct labor hours 10,000 hours 3,000 hours Applied overhead $ 270,000 $ 81,000 Overhead rate $ 27 per hour $ 27 per hour So in this financial report, the company still used the plantwide rate to apply the overhead and we need to make some adjustments to that. According to the information given, The annual Fabrication Department overhead cost function is: $200,000+$5(labor hours); The annual Assembly Department overhead cost function is: $20,000+$11(labor hours). Bear Detectors only undergo assembly department and require 2.5 assembly hours per unit, while Lion Tamers undergo both two departments, requiring 1.5 fabrication hour and 0.5 assembly hour per unit. Here's manufacturing overhead for two products: Bear Detector Lion Tamer Sales units 5,000 units 2,000 units Labor hours for assembly 12,500 hours 1,000 hours Annual Assembly $157,500 $31,000 Department overhead costs 0 Labor hours for fabrication 3,000 hours Annual Fabrication 0 $215,000 Department overhead costs Therefore, total manufacturing overhead of Bear Detector is purely $ 157,500, and for Lion Tamer, its $31,000+$ 215,000=$ 246,000. With revised manufacturing overhead, we can evaluate the profitability now. This is a revised financial result for last year: Bear Detector Lion Tamer Sales $500,000 $300,000 Cost of goods sold: Direct materials $110,000 $65,000 Direct labor 150,000 $45,000 Manufacturing overhead Total Gross profit 157,500 $246,000 $417,500 $82,500 $356,000 $(56,000) From the result, it can be clearly seen that the profitability for two products is reversed. Following are the explanations for the result and some appropriate recommendations. Explanation 1: Bear Detectors only undergo the operation of assembly, which is labor-intensive and therefore much cheaper than the machine-intensive. Lion Tamers undergo both assembly and fabrication process, so Lion Tamers' manufacturing overhead costs are higher than Bear Detectors'. Explanation 2: By using the department rate, redundant overhead costs are removed from the total manufacturing costs of Bear Detector and more costs are allocated to Lion Tamer because of its increasing fabrication department overhead costs. These two changes make gross profit of Bear Detector increase and decrease in Lion Tamer. Some recommendations: The negative profit of Lion Tamer is accountable. The investment in machines are not cheap and it always take a relatively long time to recoup the money. So the management group should wait for certain years to see if the situation will improve. During this period of time, there are some other things management can do to improve the profit. First of all, maybe the company can change its pricing strategy. With so many production costs and investment, Lion Tamer's sales price per unit is only $50 higher than Bear Detector, which seems a little bit lower than it should be. Second, the company may also adapt a more flexible activitybased costing so that management will precisely know the corresponding relationship between activities and their costs. This is also an easy way for cost control. Whether or not the production Bear Detectors will be continued is partially based on the gross profit it earned last year. So before the evaluation of the profitability of Dart's two products, it's necessary to make a basic analysis and explanation of this case based on the information given, which is helpful for the decision-making and related measures. According to this case, at the beginning of its operation, Dart Products only produced one product--- a radar detector. The whole operation process was very simple: all they needed to do was to employ workers to finish the assembly using purchased components. Here, manufacturing overhead was a relatively small part of the overall production costs, and we can apply overhead with a plantwide rate. In this case, a more simple and convenient computation of costs is offered, which is also suitable for the situation. However, the plantwide rate was of little use when the company started to produce the second product involving both labor- and machine-intensive operations. The production of Bear Detector remains the same, but to finish the production of Lion Tamer, direct materials need the further processing in two departments. Referring to the materials in Module 18, we can find that only when a company produces just one product or multiple products are similar concerning the activity level that drives most of the overhead costs will the plantwide overhead allocation method is used. Since the company produces two different products in different production departments, departmental overhead rate instead of plantwide rate will produce a more authentic assignment of overhead costs to these two products. From the last year's financial report, we can notice that the management of the company has already refined the assignment of production cost by introducing direct materials and labor. As for the manufacturing overhead: Bear Detector Lion Tamer Direct labor $150,000 $45,000 Labor rate $15 per hour $15 per hour Direct labor hours 10,000 hours 3,000 hours Applied overhead $ 270,000 $ 81,000 Overhead rate $ 27 per hour $ 27 per hour So in this financial report, the company still used the plantwide rate to apply the overhead and we need to make some adjustments to that. According to the information given, The annual Fabrication Department overhead cost function is: $200,000+$5(labor hours); The annual Assembly Department overhead cost function is: $20,000+$11(labor hours). Bear Detectors only undergo assembly department and require 2.5 assembly hours per unit, while Lion Tamers undergo both two departments, requiring 1.5 fabrication hour and 0.5 assembly hour per unit. Here's manufacturing overhead for two products: Bear Detector Lion Tamer Sales units 5,000 units 2,000 units Labor hours for assembly 12,500 hours 1,000 hours Annual Assembly $157,500 $31,000 Department overhead costs 0 Labor hours for fabrication 3,000 hours Annual Fabrication 0 $215,000 Department overhead costs Therefore, total manufacturing overhead of Bear Detector is purely $ 157,500, and for Lion Tamer, its $31,000+$ 215,000=$ 246,000. With revised manufacturing overhead, we can evaluate the profitability now. This is a revised financial result for last year: Bear Detector Lion Tamer Sales $500,000 $300,000 Cost of goods sold: Direct materials $110,000 $65,000 Direct labor 150,000 $45,000 Manufacturing overhead Total Gross profit 157,500 $246,000 $417,500 $82,500 $356,000 $(56,000) From the result, it can be clearly seen that the profitability for two products is reversed. Following are the explanations for the result and some appropriate recommendations. Explanation 1: Bear Detectors only undergo the operation of assembly, which is labor-intensive and therefore much cheaper than the machine-intensive. Lion Tamers undergo both assembly and fabrication process, so Lion Tamers' manufacturing overhead costs are higher than Bear Detectors'. Explanation 2: By using the department rate, redundant overhead costs are removed from the total manufacturing costs of Bear Detector and more costs are allocated to Lion Tamer because of its increasing fabrication department overhead costs. These two changes make gross profit of Bear Detector increase and decrease in Lion Tamer. Some recommendations: The negative profit of Lion Tamer is accountable. The investment in machines are not cheap and it always take a relatively long time to recoup the money. So the management group should wait for certain years to see if the situation will improve. During this period of time, there are some other things management can do to improve the profit. First of all, maybe the company can change its pricing strategy. With so many production costs and investment, Lion Tamer's sales price per unit is only $50 higher than Bear Detector, which seems a little bit lower than it should be. Second, the company may also adapt a more flexible activitybased costing so that management will precisely know the corresponding relationship between activities and their costs. This is also an easy way for cost control