Manchester Technology, Inc. manufactures several different types of printed circuit boards; however, two of the boards account for the majority of the companys sales. The first of these 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 73,000 of the TV boards in 20x1 at a price of $470 per unit. The second high-volume product, a personal computer circuit board, is a recent addition to Manchesters 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 48,000 PC boards at $860 per unit.

Manchesters management group is meeting to discuss how to spend the sales and promotion dollars for 20x1. The sales manager believes that the market share for the TV board could be expanded by concentrating Manchesters promotional efforts in this area. In response to this suggestion, the production manager said, Why dont you go after a bigger market for the PC board? The cost sheets that I get show that the contribution from a PC board is significantly larger than 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	$	227		$	147
Direct labor		3.0	hr.		1.5	hr.
Machine time		1.5	hr.		1.5	hr.

Variable manufacturing overhead is applied on the basis of direct-labor hours. For 20x1, variable overhead is budgeted at $2,360,000, and direct-labor hours are estimated at 266,175. The hourly rates for machine time and direct labor are $36 and $44, 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 $21,627,000.

Andrew Fulton, Manchesters 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 of the 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 it to 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.

Required per Unit	PC Board			TV Board
Parts:		71			34
Machine insertions		44			33
Manual insertions		27			1
Machine setups		3			2
Hazardous waste disposal, in lb.		.40			.06
Inspections		4			3

Required:

1. Identify at least four general advantages associated with activity-based costing.

2. On the basis of Manchesters unit cost data given in the problem, calculate the total amount that each of the two product lines will contribute toward covering fixed 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 fixed costs and profit in 20x1.

This is all of the information the question gave me

Cost Driver Number of parts Number of boards Number of boards Budgeted Annual Activity for cost Driver 6,184, see parts 127,ese boards 127,05e boards Budgeted cost Procurement $ 880, een Production scheduling 480, eco Packaging and shipping 960, eee Total $ 2,320, eee Machine setup $ 924, eee Hazardous waste 112, eee disposal Quality control 1,168, eee General supplies 156, eee Total $ 2,360, eee Machine insertion $ 2,800, eee Manual insertion 8,880, eee Wave-soldering 384, eee Total $11,984, eee 304,50e setups 24,759 pounds Number of setups Pounds of waste Number of inspections Number of boards 431,550 inspections 127,058 boards Number of parts Number of parts Number of boards 4,425,00e parts 1,659,800 parts 127,050 boards processes Required Required Required 1 2 3 Identify at least four general advantages associate with activity-based costing. Select "X" if the item is a general advantage. Allows management to focus on value-added and non-value-added activities so that non-value-added activities can be controlled or eliminated, thus streamlining production Highlights the relationship between activities and identifies opportunities to reduce costs (i.e. designing products with fewer parts in order to reduce the cost of the manufacturing process Provides management with reports that are easier to interpret because only one manufacturing-overhead cost pool is used per product. Provides management with a more thorough understanding of complex product costs and product profitability for improved resource management and pricing decisions. Provides a more appropriate means of charging overhead costs to products. Requires less resources and is easier to implement than traditional costing systems.