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 20,000 Advanced 10,000 Total 30,000 Number of units produced and sold Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income (loss) $3,080,800 2,380,000 780, 720, eee $ (20,000) $2,800,000 1,350,880 650,eee 480,00 $ 170,000 $5,000,000 3 ,650,880 1,350,000 1. 209.989 $ 150,00 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: Molding $ 787,500 Assemble and Pack $ 562,580 Total $ 1,358,980 Manufacturing overhead costs Direct labor hours: Basic Advanced Machine hours: Basic Advanced 10, eee 5, eee 20, eee 10,80 30, eee 15,000 12,800 10, eee 12.989 10,00 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: Activity Cost Pool Machining Assemble and pack Order processing Setups Other (unused capacity) Activity Measure Machine-hours in Molding Direct labor hours in Assemble and Pack Number of customer orders Setup hours Manufacturing Overhead $ 417,5ea 282.5ea 23e, een 34e, Bee se, sea $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 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. Calculate an activity rate for each activity cost pool. (Round your answers to 2 decimal places.) Activity Cost Pool Activity Rate Machining per MH Assemble and pack per DLH Order processing Setups per hour per order 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 S 0 S Reg 1A Reg 1B Req 2A Req 2B Req 2c Reg 3A Req 38 Reg 30 Reg 4 Reg 5 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 Total Basic Advanced Variable expenses Total variable expenses Traceable fixed expenses Total traceable fixed expenses Segment margin Common foced expenses: S0S0 Total common foced expenses S 0 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