INTEGRATION EXERCISE 5 Plantwide and Departmental Overhead Allocation; Activity-Based Costi Segmented Income Statements LO 2-1, LO 2-2, LO 2-3, LO 2-4, LO 4-1, LO 4-2, LO 4-3, LO 4-4 Koontz Company manufactures two models of industrial components - a Basic model and an Advan Model. The company considers all of its manufacturing overhead costs to be fixed and it uses plantw manufacturing overhead cost allocation based on direct labor-hours. Koontz's controller prepared segmented income statement that is shown below for the most recent year (he allocated selling administrative expenses to products based on sales dollars): 5. Using your contribution format segmented income statement from requirement 4 , calculate even point in dollar sales for the Advanced model. 6. Explain how Koontz's activity-based costing approach differs from its plantwide and depe approaches. Also, explain how the controller's allocation of the selling and administrative differs from how you accounted for these expenses within your contribution format segmente statement. INTEGRATION EXERCISE 5 Plantwide and Departmental Overhead Allocation; Activity-Based Costing; Segmented Income Statements LO 2-1, LO 2-2, LO 2-3, LO 2-4, LO 4-1, LO 4-2, LO 4-3, LO 4-4 Koontz Company manufactures two models of industrial components-a Basic model and an Advanced Model. The company considers all of its manufacturing overhead costs to be fixed and it uses plantwide manufacturing overhead cost allocation based on direct labor-hours. Koontz's controller prepared the segmented income statement that is shown below for the most recent year (he allocated selling and administrative expenses to products based on sales dollars): integration Exercises Dircet laborens are paid \$26! per boum. Disect matetials cour s.40 per usit for the 13sic model and $60 per unit for the Adratced movel. Kownte is eonvidering a change from plantwide overhesd allocution to a based on machind-hour and the owerhead comes in its Ascemble and Fhak Department woald be allocated baced oe dircet laber hours. To kmable furthec anslysis, the oontroller mathered the lolkwing information: Reuired: 1. Wsing the plantwide approsch. a. Calculate the plantwide overhead nute. b. Calculase the amount of everbied that would be asigned lo cach product 2. Usine a departmental a poraich: a. Calculade the departimeatal overhead fates. b. Calculate tho fotal antount of avethead that would be assigned to each pecdoct. ic. Using yoar departmentil oncrhead cod allocationa, rodo the eontrolfer's regenceted inkotse Maternest (cohlande bo alocete seiling and mdeministrative exponses hased on sales dollars) 3. Koont 's production manigger hid magested usibk wetivity-bated casting inatcad of either the phastwide or dopartmental appecackeh. To ficilitave the accenary calculahonl, she assigncd klye She also determined that the average order sire for the Basic and Advanced models is 400 anits and 50 uaits, respectively, The molding machines require a setup for each ordet. Ooe setup hour is zequired for each castorner arder of the Basic miodel and three hours are required to setup fot an order of the Advanced model. Using the additional information providod by the prodoction managet, calculate: a. An activity rate for cach activity cost pool. b. The total manufscturing overtical cost atlocaled io the Basic model and the Advanced model usiog 4. The conpany pays a sales commissions of 5 ; for the Basie model and lo: for the Autracocd madel. the activity-based appruach. expenkes all of the company's comes into thire categories; ymriable expensef. Traceable fised expemes, and comannen fixed expeases, Wie your intivity-baned cost assiganesats from requircthent 3 lo assigat the manufacturing costs incladed in your traccable fived experses. 5. Using your contribution format segmented income statement from requirement 4 , calculate the breakeven point in dollar sales for the Advanced model. 6. Explain how Koontz's activity-based costing approach differs from its plantwide and departmental approaches. Also, explain how the controller's allocation of the selling and administrative expenses differs from how you accounted for these expenses within your contribution format segmented income statement. INTEGRATION EXERCISE 5 Plantwide and Departmental Overhead Allocation; Activity-Based Costi Segmented Income Statements LO 2-1, LO 2-2, LO 2-3, LO 2-4, LO 4-1, LO 4-2, LO 4-3, LO 4-4 Koontz Company manufactures two models of industrial components - a Basic model and an Advan Model. The company considers all of its manufacturing overhead costs to be fixed and it uses plantw manufacturing overhead cost allocation based on direct labor-hours. Koontz's controller prepared segmented income statement that is shown below for the most recent year (he allocated selling administrative expenses to products based on sales dollars): 5. Using your contribution format segmented income statement from requirement 4 , calculate even point in dollar sales for the Advanced model. 6. Explain how Koontz's activity-based costing approach differs from its plantwide and depe approaches. Also, explain how the controller's allocation of the selling and administrative differs from how you accounted for these expenses within your contribution format segmente statement. INTEGRATION EXERCISE 5 Plantwide and Departmental Overhead Allocation; Activity-Based Costing; Segmented Income Statements LO 2-1, LO 2-2, LO 2-3, LO 2-4, LO 4-1, LO 4-2, LO 4-3, LO 4-4 Koontz Company manufactures two models of industrial components-a Basic model and an Advanced Model. The company considers all of its manufacturing overhead costs to be fixed and it uses plantwide manufacturing overhead cost allocation based on direct labor-hours. Koontz's controller prepared the segmented income statement that is shown below for the most recent year (he allocated selling and administrative expenses to products based on sales dollars): integration Exercises Dircet laborens are paid \$26! per boum. Disect matetials cour s.40 per usit for the 13sic model and $60 per unit for the Adratced movel. Kownte is eonvidering a change from plantwide overhesd allocution to a based on machind-hour and the owerhead comes in its Ascemble and Fhak Department woald be allocated baced oe dircet laber hours. To kmable furthec anslysis, the oontroller mathered the lolkwing information: Reuired: 1. Wsing the plantwide approsch. a. Calculate the plantwide overhead nute. b. Calculase the amount of everbied that would be asigned lo cach product 2. Usine a departmental a poraich: a. Calculade the departimeatal overhead fates. b. Calculate tho fotal antount of avethead that would be assigned to each pecdoct. ic. Using yoar departmentil oncrhead cod allocationa, rodo the eontrolfer's regenceted inkotse Maternest (cohlande bo alocete seiling and mdeministrative exponses hased on sales dollars) 3. Koont 's production manigger hid magested usibk wetivity-bated casting inatcad of either the phastwide or dopartmental appecackeh. To ficilitave the accenary calculahonl, she assigncd klye She also determined that the average order sire for the Basic and Advanced models is 400 anits and 50 uaits, respectively, The molding machines require a setup for each ordet. Ooe setup hour is zequired for each castorner arder of the Basic miodel and three hours are required to setup fot an order of the Advanced model. Using the additional information providod by the prodoction managet, calculate: a. An activity rate for cach activity cost pool. b. The total manufscturing overtical cost atlocaled io the Basic model and the Advanced model usiog 4. The conpany pays a sales commissions of 5 ; for the Basie model and lo: for the Autracocd madel. the activity-based appruach. expenkes all of the company's comes into thire categories; ymriable expensef. Traceable fised expemes, and comannen fixed expeases, Wie your intivity-baned cost assiganesats from requircthent 3 lo assigat the manufacturing costs incladed in your traccable fived experses. 5. Using your contribution format segmented income statement from requirement 4 , calculate the breakeven point in dollar sales for the Advanced model. 6. Explain how Koontz's activity-based costing approach differs from its plantwide and departmental approaches. Also, explain how the controller's allocation of the selling and administrative expenses differs from how you accounted for these expenses within your contribution format segmented income statement