Manchester Technology, Inc. manufactures several different types of printed circuit boards; however, two ofthe boards account for'dte majority of the company's sales. The rst ofthese boards, a television circuit board, has been a standard in the industry for several years. The market for this type of board is competitive and price-sensitive. Manchester plans to sell 82,000 of the W boards in 20x1 at a price of $480 per unit. The second high-volume product, a personal computer circuit board, is a recent addition to Manchester's product line. Because the PC board incorporates the latest technology, it can be sold at a premium price. The 20x1 plans include the sale of 57,000 PC boards at $005 per unit. Manchester's management group is meeting to discuss how to spend the sales and promotion dollars for 20):]. The sales manager believes that the market share for the TV board could be expanded by concentrating Manchester's promotional efforts in this area. In response to this suggestion, the production manager said, \"Why don't you go after a bigger market forthe PC board? The cost sheets that | get show that the contribution from a PC board is signicantly largerthan the contribution from a TV board. I know we get a premium price for the PC board. Selling it should help overall profitability.\" The cost-accounting system shows that the following costs apply to the PC and TV boards. PC Board TV Board Direct material $246 $156 Direct labor 4.0 hr. 1.5 hr. Machine time 1.0 hr. 1.5 hr. ' Variable manufacturing overhead is applied on the basis of direct-labor hours. For 20x1, variable overhead is budgeted at $2,405,000, and direct-labor hours are estimated at 386,100. The hourly rates for machine time and direct labor are $32 and $40, respectively. The company applies a material-handling charge at 10 percent of material cost. This material-handling charge is not included in variable manufacturing overhead. Total 20x1 expenditures for direct material are budgeted at $25,814,000. Andrew Fulton, Manchester's controller, believes that before the management group proceeds with the discussion about allocating sales and promotional dollars to individual products, it might be worthwhile to look at these products on the basis ofthe activities involved in their production. Fulton has prepared the following schedule to help the management group understand this concept. \"Using this information,\" Fulton explained, \"we can calculate an activity-based cost for each TV board and each PC board and then compare 'rtto the standard cost we have been using. The only cost that remains the same for both cost methods is the cost of direct material. The cost drivers will replace the direct labor, machine time, and overhead costs in the old standard cost figures.\" Budgeted Annual Activity Budgeted Cost Cost Driver for Cost Driver Procurement $ 920,000 Number of parts 9,450,900 parts Production scheduling 525,000 Number of boards 152,900 boards Packaging and shipping 1,050,000 Number of boards 152,900 boards Total $ 2,545,000 Machine setup $ 960,000 Number of setups 521,400 setups Hazardous waste disposal 130,000 Pounds of waste 45,?33 pounds Quality control 1,222,000 Number of inspections 521,400 inspections General supplies 133,000 Number of boards 152,900 boards Total $ 2,495,000 Machine insertion $ 3,250,000 Number of parts 6,320,000 parts Manual insertion 9,200,000 Number of parts 2,502,000 parts Navesoldering 349,000 Number of boards 152,900 boards Total $13,299,000 Required per Unit PC Board TV Board Parts: 39 43 Machine insertions 53 42 Manual insertions 36 1 Machine setups 4 3 Hazardous waste disposal, in lb. .66 .99 Inspections 4 3 | Required: 1. Identify at least four general advantages associated with activity-based costing. 2. On the basis of Manchester's unit cost data given in the problem, calculate the total amount that each ofthe two product lines will contribute toward covering xed costs and profit in 20x1. 3. Using activity-based costing, calculate the total amount that each of the two product lines will contribute toward covering xed costs and profit in 20x1. Complete lis question by entering your answers in tile tabs bebw. I Requiredl H Required 2 Required Identifv at least four general advantages associate with activitybased costing. Select 'X" if the item is a general advantage. Allows management to focus on valueadded and nonvalu eadded activities, so that nonvalueadded activities can be controlled or eliminated, thus streamlining production processes. Highlights the relationship between activities and identies opportunities to reduce costs {i.e., designing products with fewer parts in order to reduoe the cost of the manufacturing process}. Provides management with reports that are easier to interpret because ont',r one manufactulingovemead cost pool is used per product. Provides management with a more thorough understanding of complex product costs and product protability for improved resouroe management and inducing decisions. Provides a more appropriate means of charging overhead costs to products. - Requires less resouroes and is easier to implementthan traditional costing systems. - Required 2 ) Required 3 Required] 1 Required2 0n the basis of Manchester's unit cost data given in the problem, calculate the total amount that each of the two product lines will contibute toward covering xed costs and prot in 20x1. [Round your intermediate calculations to 2 decimal places.) mmmmmm __ Required 1 Required 2 Required 3 Using activity-based costing, calculate the total amount that each of the two product lines will contribute toward covering fixed costs and profit in 20x1. (Round your intermediate calculations to 2 decimal places.) PC Board TV Board Total contribution margin