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): Number of units produced and sold Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income (loss) Basic 20,000 Advanced 10,000 Total 30,000 $ 2,000,000 1,350,000 650,000 $ 5,000,000 3,650,000 $ 3,000,000 2,300,000 700,000 720,000 $ (20,000) 480,000 $ 170,000 1,350,000 1,200,000 $ 150,000 Direct laborers are paid $20 per hour. Direct materials cost $40 per unit for the Basic model and $60 per unit for the Advanced model. Koontz is considering a change from plantwide overhead allocation to a departmental approach. The overhead costs in the company's Molding Department would be allocated based on machine-hours and the overhead costs in its Assemble and Pack Department would be allocated based on direct labor-hours. To enable further analysis, the controller gathered the following information: Assemble and Pack $ 562,500 Manufacturing overhead costs Direct labor-hours: Basic Advanced Machine-hours: Basic Advanced Required: 1. Using the plantwide approach: Molding $ 787,500 Total $ 1,350,000 10,000 20,000 30,000 5,000 10,000 15,000 12,000 0 12,000 10,000 0 10,000 a. Calculate the plantwide overhead rate. b. Calculate the amount of overhead that would be assigned to each product. 2. Using a departmental approach: a. Calculate the departmental overhead rates. b. Calculate the total amount of overhead that would be assigned to each product. c. Using your departmental overhead cost allocations, redo the controller's segmented income statement (continue to allocate selling and administrative expenses based on sales dollars). 3. Koontz's production manager has suggested using activity-based costing instead of either the plantwide or departmental approaches. To facilitate the necessary calculations, she assigned the company's total manufacturing overhead cost to four activity cost pools as follows: Activity Cost Pool Machining Assemble and pack Order processing Setups Activity Measure Machine-hours in Molding Direct labor-hours in Assemble and Pack Number of customer orders Setup hours Manufacturing Overhead $ 417,500 282,500 310,000 340,000 $ 1,350,000 She also determined that the average order size for the Basic and Advanced models is 400 units and 50 units, respectively. The molding machines require a setup for each order. One setup hour is required for each customer order of the Basic model and three hours are required to setup for an order of the Advanced model. Using the additional information provided by the production manager, calculate: a. An activity rate for each activity cost pool. b. The total manufacturing overhead cost allocated to the Basic model and the Advanced model using the activity-based approach. 4. The company pays a sales commissions of 5% for the Basic model and 10% for the Advanced model. Its traceable fixed advertising expenses include $150,000 for the Basic model and $200,000 for the Advanced model. The remainder of the company's selling and administrative costs are common fixed expenses. Using your activity-based cost assignments from requirement 3, prepare a contribution format segmented income statement that is adapted from Exhibit 7-8. (Hint: Organize all of the company's costs into three categories: variable expenses, traceable fixed expenses, and common fixed expenses.) 5. Using your contribution format segmented income statement from requirement 4, calculate the break-even point in dollar sales for the Advanced model. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2A Req 2B Req 2C Req 3A Req 3B Req 4 Req 5 Calculate the total manufacturing overhead cost allocated to the Basic model and the Advanced model using the activity- based approach. (Round your intermediate calculations to 2 decimal places.) Basic Advanced Machining $ 227,760 $ 189,800 Assemble and pack 188,400 94,200 Order processing 62,000 248,000 Setups Total overhead cost assigned $ 478,160 532,000 < Req 3A Req 4 Sales Variable expenses: Direct labor Direct materials Sales commissions Total $ 5,000,000 $ 900,000 Basic Advanced 3,000,000 $ 2,000,000 600,000 300,000 1,400,000 800,000 600,000 350,000 150,000 200,000 Total variable expenses 2,650,000 1,550,000 1,100,000 Contribution margin 2,350,000 1,450,000 900,000 Traceable fixed expenses: Advertising 350,000 150,000 200,000 Setups 340,002 26,154 313,848 Assemble and pack 282,600 188,400 94,200 Machining 417,560 227,760 189,800 Order processing Total traceable fixed expenses Segment margin Common fixed expenses: Selling and administrative 80,000 500,000 Total common fixed expenses 580,000 Net operating income $ (580,000) 592,314 797,848 $ 857,686 $ 102,152 Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2A Req 2B Req 2C Req 3A Req 3B Req 4 Req 5 Using your contribution format segmented income statement from requirement 4, calculate the break-even point in dollar sales for the Advanced model. (Round your intermediate calculations to 2 decimal places. Round your final answer to the nearest whole dollar.) Break-even point in dollar sales < Req 4 Req 5 >