Management has decided to reduce direct material and ordering costs by purchasing sub-assembled components and not individual parts. Using the attached Excel file, you must do the following.

Requirements:

Using the Revised Category Costs tab, make the following changes under " Changes" Category. Other categories' costs remain same.

Reduce direct labor rate from $30.00 to $28.00 per unit

Reduce direct labor quantity from 3.00 to 2.65 hours per unit

Reduce receiving and shipping ordering quantity from 100 to 90 units.

Reduce testing and inspection from $2.00 to $1.75 per unit

Reduce rework costs from $20 to $18 per unit

Compute total costs for each category

Complete Revised Cost Information tab

Calculate total costs

Calculate cost per unit for each category, round to two decimal points

Follow the instructions on the Data tab of the worksheet. Show all calculations within the cells of the Excel spreadsheet. This means that you must use formulas and links so that your thought process can be examined. You must also include a detailed explanation of each journal entry that you make or do not make on each date to convey your thought process. There should be no hard coding of solutions.

Current						Changes
	Manufacturing costs Information					Revised Manufacturing costs Information
	for 100,000 units					for 100,000 units
Cost Driver	Cost Driver Qty	Budget units per cost driver	Budget Total Qty	Budgeted cost per unit		Budget cost driver QTY	Budget units per cost driver	Budget Total Qty	Budgeted Cost per unit of Cost Driver	Revised Total
Number of kits	1	100,000	100,000	180
Direct Labor hours	3	100,000	300,000	30
Machine-Hours	0		150,000	25
Number of orders	100	100	10,000	40
Testing hours	15	100,000	1,500,000	2
Rework	2	5,000	10,000	20

Module 1 Option 1
2
	Revised Manufacturing costs		Costs per
	Costs for 100,000 units		100,000	units
	a.		b.
Direct Manufacutring Costs
Direct Material Costs
Direct Labor Costs
Direct Machine costs
Direct Manufacturing costs
subtotal
Manufacturing Overhead costs:
Ordering and receiving costs
Testing and inspection costs
Rework costs
Manufacturing Overhead Costs
Total Costs