Marquis's Trophies makes trophies and plaques and operates at capacity. Marquis does large custonm orders, such as the participant trophies for the Mishawaka Little League. The controller has asked you to compare plant-wide, department, ad activity-based cost allocations. Marquis's Trophies Budgeted Information For the Year Ended 30 November 2018 Total R24 250 R24 600 Forming Department Direct materials Direct labour Overhead costs Trophies R13 000 R15 600 Plaques R11 250 R9 000 Setup R12 000 R10 386 Total R11 975 R18 300 Su Assembly De Direct materials Direct labour Overhead costs Plaques R9 375 R10 500 R2 600 R7 800 Setup R23 000 R10 960 Other information follows: Setup costs vary with the number of batches processed in each department. The budgeted number of batches for each product line in each t is as follows Trophies 40 43 Formin Assembly department 116 103 tment Supervision costs vary with direct labour costs in each department. Required 11 Calculate the budgeted costs of trophies and plaques based on a single plant-wide overhead rate, if total overhead is allocated based on total direct costs 12 Calculate the budgeted cost of trophies and plaques based on departmental overhead rates, where forming department overhead costs are allocated based on direct labour costs of the forming department, and assembly department overhead costs are allocated based on total direct costs of the assembly department 1.3 Calculate the budgeted cost of trophies and plaques if Tarquin allocates overhead costs in each department using activity-based costing. 14 Comment on the above results QUESTION 2 Exercise 7-52, page 291: Value- and Nonvalue-Added Costs QUESTION 4 Mile-High Foods, Inc., was formed in March 2018 to provide pre-packaged snack boxes for a new low cost regional airline beginning on 1 April 2018. The company has just leased warehouse space central to the two airports to store materials To move packaged materials from warehouses to the airports, where final assembly will take place, Mile-High must choose whether to lease a delivery truck and pay a full-time driver at a fixed cost of R5 000 per month, or pay a delivery service at a rate equivalent to R0.40 per box. This cost will be included in either fioxed manufacturing overhead or variable manufacturing overhead, depending on which option is chosen. The company is hoping for rapid growth, as sales forecasts for the new airline are promising. However, it is essential that Mile-High managers carefully control costs in order to be compliant with their sales contract and remain profitable. Ron Spencer, the company president, is trying to determine whether to use absorption or variable costing to evaluate the performance of company managers. For absorption costing, he intends to use the practical capacity level of the facility, which is 20 000 boxes per month. Production-volume variance will be written off to cost of goods sold. Costs for the three months are expected to rmain unchanged. The costs and revenues for April, May and June are expected to be as follows: Sales revenue Direct material cost Direct manufacturing labour cost Variable manufacturing overhead cost Variable delivery cost (if this option is chosen R0.40 per box Fixed delivery cost (if this option is chosen R5 000 per month Fixed manufacturing overhead costs Fixed administrative costs R6 per bo R1.20 per box RO.35 per box RO.15 per box R15 000 per month R28 000 per month Projected production and sales for each month follow. High production in May is the result of aun anticipated surge in June employee vacations. Sales (in units) Production 12 000 12 500 13 000 37 500 12 200 18 000 9000 39 200 Ma une Total Required 4.1 Prepare an absorption costing income statement when the fixed delivery cost option is 4.2 Prepare a variable costing income statement when the fixed delivery cost option is chosen. 4.3 Reconcile the profits QUESTION 5 The Denim World sells fabrics to a wide range of industrial and consumer users. One of the products it carries is denim cloth, used in the manufacture of jeans and carrying bags. The supplier for the denim cloth pays all incoming freight. No incoming inspection of the denim is necessary because the supplier has a track record of delivering high-quality merchandise. The purchasing officer of the Denim World has collected the following information: Annual demand for denim cloth Ordering cost per purchase order Carrying cost per year Safety-stock requirements Cost of denim cloth 26 400 metres R165 R20% of purchase costs None R9 per metre The purchasing lead time is 2 weeks. The Denim World is open 250 days a year (50 weeks for 5 days a week) Required: 5.1 Calculate the EOQ for denim cloth 5.2 Calculate the number of orders that will be placed each year. 5.3 Calculate the re-order point for denim cloth