manufactures metal products and uses activity-based costing to allocate overhead costs to customer arders for pricing purposes. Many customer orders are won terial and direct manufacturing labor costs are traced directly to each order. Marshalil's direct manufacturing labor rate is $20 per hour. The company reports the following budgeted yearly overhead costs ellocation, time-driven activity-based costing, manufacturing sector Marshall Devices through competitive bidding based on costs. Direct ma- Wages and salaries Depreciation Rent Other overhead $480,000 60,000 120,000 240,000 Total overhead costs $900000 Marshall has established four activity cost pools and the following budgeted activity for each cost pook Budgeted Total Activity for the Year Activity Cost Pool Direct manufacturing labor Number of direct manufacturing30,000 direct manufacturing support Order processing Design support Other labor-hours Number of customer orders Number of custom design-hours 2,490 custom design-hours Facility-sustaining costs allocated 30,000 direct manufacturing 500 orders to orders based on direct manufacturing labor-hours Some customer orders require more complex designs, while others need simple designs. Marshall esti- mates that it will do 120 complex designs during a year, which will each take 11.75 hours for a total of 1,410 design-hours. It estimates it will do 180 simple designs, which will each take 6 hours for a total of 1,080 design-hours Paul Napoli, Marshall's controller, has prepared the following estimates for distribution of the over- head costs across the four activity-cost pools Direct Manufacturing Design Support Labor Support Processing Wages and salaries Depreciation Rent Other overhead 40% 25% 30% 20% 10% 29% 30% 15% 10% 35% Other 5% 9% 35% 15% Total 100% 100% 100% 100% requires a simple design. Order 277100 requires $4,550 of direct materials labor-hours Order 277100 consists of four different metal products. Three products require a complex design and one and 80 direct manufacturing Required1. Allocate the overhead costs to each activity cost pool Caleulate the activity rate for each pool 2. Determine the cost of Order 277100 3. How does activity-based costing enhance Marshalil's ability to price its orders? Suppose Marshall to allocate all overhead costs to orders on the basis of direct manufacturing 4. When designing its activity-based costing system, Marshall uses time-driven activity-based costing customer designs a simple costing system labor-hours. How might this have affected Marshall's pricing decision for Order 227100 system (TDABC) for its design department. What does this approach allow Marshall to do? How would the cost of Order 277100 have been different if Marshall had used the number of rather than the number of custom design-hours cost driver do you prefer for design support? Why? to allocate costs to different customer orders? Which