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 dvanced Total Number of unita produced and sold 20,000 10,000 30,000 Sales $3,000,000 $2,000,000 5,000, 000 Coat of gooda ld 1,350,000 3, 650,000 650,000 1,350,000 2,300,000 700,000 Gross margin Selling and administrative 720,000 480,000 1,200,000 xpensen Net operating income lona) (20,000) 170,000 150,000 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 Assembly and Pack Department would be allocated based on direct labor-hours. To enable further analysis, the controller gathered the following information: Asemble Molding and Pack Total Manufacturing overhead $787,500 $562,500 $1,350,000 costa Direct labor houra sic 10,000 20,000 10,000 30,000 15,000 Advanced 5,000 Machine houra aaic 12,000 10,000 12,000 10,000 Advanced 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 averhead 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 Coat Pool Machining Assemble and pack der processing Activity Moasure Machine-hourn in Molding Direct labor houra in Apsemble and Pack 417,500 282,500 ber customer orders 230,000 Setups other ununed capacity Setup hours 340,000 80,000 $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 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 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 Setups per hour 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 0 0 0 Traceable fixed expenses: Total traceable fixed expenses 0 Segment margin Common fixed expenses: $ 0 0 Total common fixed expenses 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 Calculate an activity rate for each activity cost pool. (Round your answers to 2 decimal places.) Activity Cost Pool Machining Assemble and pack Order processing Setups Activity Rate per MH per DLH per order per hour 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 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 0 0 Traceable fixed expenses: ol Total traceable fixed expenses Segment margin Common fixed expenses: Total common fixed expenses Koontz Company manufactures two models of industrial components-a Basic model and an Advanced Model. The company considers all of ts manufacturing Overhead costs to be fixed and 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 the allocated selling and administrative expenses to products based on sales dolar Basic Advanced Total Sumber of units produced and sold 20,000 10,000 30,000 $3,000,000 $2,000,000 $5,000,000 Coat of goods Bold 2.300,000 1,350,000 3,650,000 Gross margin 700,000 650,000 1,350,000 Selling and administrative 720,000 480,000 1,200,000 expenses Net operating $ (20,000) $ 170,000 $ 150.000 Income Oss) Direct laborers are paid $20 per hour. Direct materials cost $40 per unit for the Basic model and $50 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 Nussemble Molding and Pack Total Manufacturing overhead $787,500 $562,500 $1,350,000 coats Direct labor hour! Dasle 10,000 20,000 30,000 Advanced 5,000 10,000 15,000 Machine hours: Taste 12,000 Advanced 10,000 12,000 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 dvanced Total Number of unita produced and sold 20,000 10,000 30,000 Sales $3,000,000 $2,000,000 5,000, 000 Coat of gooda ld 1,350,000 3, 650,000 650,000 1,350,000 2,300,000 700,000 Gross margin Selling and administrative 720,000 480,000 1,200,000 xpensen Net operating income lona) (20,000) 170,000 150,000 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 Assembly and Pack Department would be allocated based on direct labor-hours. To enable further analysis, the controller gathered the following information: Asemble Molding and Pack Total Manufacturing overhead $787,500 $562,500 $1,350,000 costa Direct labor houra sic 10,000 20,000 10,000 30,000 15,000 Advanced 5,000 Machine houra aaic 12,000 10,000 12,000 10,000 Advanced 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 averhead 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 Coat Pool Machining Assemble and pack der processing Activity Moasure Machine-hourn in Molding Direct labor houra in Apsemble and Pack 417,500 282,500 ber customer orders 230,000 Setups other ununed capacity Setup hours 340,000 80,000 $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 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 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 Setups per hour 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 0 0 0 Traceable fixed expenses: Total traceable fixed expenses 0 Segment margin Common fixed expenses: $ 0 0 Total common fixed expenses 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 Calculate an activity rate for each activity cost pool. (Round your answers to 2 decimal places.) Activity Cost Pool Machining Assemble and pack Order processing Setups Activity Rate per MH per DLH per order per hour 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 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 0 0 Traceable fixed expenses: ol Total traceable fixed expenses Segment margin Common fixed expenses: Total common fixed expenses Koontz Company manufactures two models of industrial components-a Basic model and an Advanced Model. The company considers all of ts manufacturing Overhead costs to be fixed and 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 the allocated selling and administrative expenses to products based on sales dolar Basic Advanced Total Sumber of units produced and sold 20,000 10,000 30,000 $3,000,000 $2,000,000 $5,000,000 Coat of goods Bold 2.300,000 1,350,000 3,650,000 Gross margin 700,000 650,000 1,350,000 Selling and administrative 720,000 480,000 1,200,000 expenses Net operating $ (20,000) $ 170,000 $ 150.000 Income Oss) Direct laborers are paid $20 per hour. Direct materials cost $40 per unit for the Basic model and $50 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 Nussemble Molding and Pack Total Manufacturing overhead $787,500 $562,500 $1,350,000 coats Direct labor hour! Dasle 10,000 20,000 30,000 Advanced 5,000 10,000 15,000 Machine hours: Taste 12,000 Advanced 10,000 12,000