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): Basic Advanced Total Number of units produced and sold 20,000 10,000 30,000 Sales $3,000,000 2,300,000 700,000 $2,000,000 1,350,000 650,000 480,000 $5,000,000 3,650,000 1,350,000 1,200,000 Cost of goods sold Gross margin Selling and administrative expenses 720,000 (20,000) 170,000 150,000 Net operating income (loss) 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 Assembly and Pack Department would be allocated based on direct labor-hours. To enable further analysis, the controller gathered the following information: Assemble Molding $ 787,500 and Pack Total $ 562,500 Manufacturing overhead costs Direct labor hours $1,350,000 20,000 10,000 Basic 10,000 30,000 15,000 Advanced 5,000 Machine hours Basic Advanced 12,000 12,000 10,000 10,000 Required: 1. Using the plantwide approach: 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 five activity cost pools as follows: Manufacturing Overhead Activity Cost Pool Machining Assemble and pack Order processing Activity Measure Machine-hours in Molding 417,500 282,500 230,000 340,000 80,000 Direct labor hours in Assemble and Pack Number of customer orders Setups Other (unused capacity) Setup hours $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. The company pays a sales commissions of 5% for the Basic model and 10% for the Advanced model. Its traceable fixed advertising costs 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 organization-sustaining in nature. 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. c. The total selling and administrative cost traced to the Basic model and the Advanced model using the activity-based approach. 4. Using your activity-based cost assignments from requirement 3, prepare a contribution format segmented income statement that is adapted from Exhibit 4-8. (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 3C Req 4 Req 5 Calculate the plantwide overhead rate. Plantwide overhead rate per DLH Calculate the amount of overhead that would be assigned to each product. Basic Advanced Amount of overhead Calculate the departmental overhead rates. (Round your answers to 2 decimal places.) Molding Department Assemble and Pack Department Manufacturing overhead rate per MH per DLH Using your departmental overhead cost allocations, redo the controller's segmented income statement (continue to allocate selling and administrative expenses based on sales dollars). (Round your intermediate calculations to 2 decimal places.) Advanced Basic Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Calculate an activity rate for each activity cost pool. (Round your answers to 2 decimal places.) Activity Cost Pool Activity Rate Machining Assemble and pack Order processing per MH per DLH per order per hour Setups 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 Assemble and pack Order processing Setups Total overhead cost assigned Calculate the total selling and administrative cost traced to the Basic model and the Advanced model using the activity-based approach Basic Advanced Total traceable selling and administrative cost Using your activity-based cost assignments from requirement 3, prepare a contribution format segmented income statement. (Round your intermediate calculations to 2 decimal places.) Koontz Company Income statement Advanced Total Basic Variable expenses Total variable expenses Traceable fixed expenses: Total traceable fixed expenses Segment margin Common fixed expenses: Total common fixed expenses 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