Matchbox Co. Manufactures Product A and Product B. Annual Production in units for each product is as follows: Product A Product B Annual Production in units 4,800 22,000 The company currently uses direct labor hours to assign overhead costs to products. The estimates for total overhead and labor hours for the year are as follows: Total Estimated Overhead $980,000 Total Estimated Labor Hours 56,000 Other per unit information relating to Product A and B is Product A Product B Labor Hours to produce a unit 2.5 2 Direct Materials cost per unit $42 $38 Direct Labor cost per unit $25 $20 1. Compute the predetermined overhead rate under a traditonal costing system. 2. Compute the overhead cost to produce one unit of Product A and one unit of Product B under the traditional costing system. Overhead Rate Per Unit $980,000 = $17.50 Product A $2.50 $17.50 $43.75 56,000 Product B $2.00 $17.50 $35.00 3. Compute the total cost to product one unit of Product A and Prodcut B under traditional costing. Use the chart below. Traditional Costing Activity Based Per Unit Product A Product B Product A Product B Direct Materials $42.00 $38.00 cell reference cell reference Direct Labor $25.00 $20.00 cell reference cell reference Overhead $43.75 $35.00 cell reference cell reference Total Cost Per Unit $110.75 $93.00 formula formula 4. Matchbox Co. is considering the implementation of an Activity Based Costing system and has identified the following activities, traceable overhead costs, and cost drivers. Complete the table below to compute the overhead rate for each activity Activity Traceable Overhead Cost Driver Information Overhead Rate Activity Driver Product A Driver Product B Driver Total A & B Driver Machine Set-ups $300,000 # set-ups 3,200 1,800 5,000 $60.00 Quality Inspections $158,000 # inspections 5,000 2,900 7,900 $20.00 Production Orders $100,000 # orders 400 600 1,000 $100.00 Machine Hrs. Worked $325,000 # machine hrs 15,000 35,000 50,000 $6.50 Materials Receipts $97,000 # receipts 300 700 1,000 $97.00 $980,000 5. Compute the overhead cost to produce one unit of Product A and one unit of Product B under the Activity Based Costing System. Fill in this unit cost data along with unit Direct Material and Direct Labor cost data in the chart on the preceding page. Activity Cost Driver Product A Product B Overhead Total Overhead Total A Driver Rate Overhead B Driver Rate Overhead Machine Set-ups # set-ups cell reference cell reference formula cell reference cell reference formula Quality Inspections # inspections cell reference cell reference formula cell reference cell reference formula Production Orders # orders cell reference cell reference formula cell reference cell reference formula Machine Hrs. Worked # machine hrs cell reference cell reference formula cell reference cell reference formula Materials Receipts # receipts cell reference cell reference formula cell reference cell reference formula Total Product A Overhead formula Total Product B Overhead formula Total Units cell reference Total Units cell reference overhead cost per unit formula overhead cost per unit formula 6. Save the spreadsheet as Your Name Run1 Type your response to #9 here 7. Make the following changes (do not change any other data): change the # of units in cell D6 to 24,000 change the # of hrs. in cell C14 to 3 8. Save the spreadsheet as Your Name Run 2 9. Compare the two spreadsheets and explain why the following cells changed (type your response to the right): Total Estimated Hrs in Cell H10 Overhead Rate Per Unit in H21 Overhead Cost Per Unit in I59 10. Upload both spreadsheets to Blackboard.