Meanwhile its custom-made its custom declining volumes but com i ng forced it to lower prices on level close to its cost of production high demand and customers le commented on its favor ment is considering dropping its line of retail the company to lower prices on its high- wer) prices compared to t o p Management is Products and devoting all of its res t ostom-made furniture Required 1 What reasons could explain why it for the company volume retail products 2. Why do you believe the company charges less for cu Does a company's costing method have any effect on its pricing deciso 4. Aside from the differences in volume of output, what pro between making custom-onder furniture and misstarket furnishings 5. What information might the company obtain from using based costing methods? Craft Pro Machining produces machine tools for the construction i overhead costs were taken from its company records. any charges less for custom order products than its competitors ces in volume of outpu Pricing decisions? Explain. t on differences do you believe exist the company obtain from usine ARChat it might not obtain using volume- -3A aty-based ning produces machine tools for the industry. The following details abou P1 P3 Production Activity Indirect Labor indirect Materials Other Overhead $120.000 Grinding Polishing Product modification Providing power System calibration $135.000 600,000 $255.000 500.000 Additional information on the drivers for its production activities follows. Grinding..... Polishing ... Product modification ........... Providing power..... System calibration ..... 13.000 machine hours 13.000 machine hours 1.500 engineering hours 17.000 direct labor hours 400 batches Required 1. Classify each activity as unit level, batch level, product level, or facility level. 2. Compute the activity overhead rates using ABC. Combine the grinding and polishing activities into single cost pool 3. Determine overhead costs to assign to the following jobs using ABC Job 3175 Job 4286 Number of units ....... Machine hours.. Engineering hours... Batches Direct labor hours 200 units 550 MH 26 eng. hours 30 batches 500 DLH 2,500 units 5.500 MH 32 eng hours 90 batches 4.375 DLH 4. What is the overhead cost per unit for Job 31757 What is the overhead cost per unit for Job 4869 5. If the company uses a plantwide overhead rate based on direct labor hours, what is the o b De overhead cost for each unit of Job 3175? Of Job 4286? 6. Compare the overhead costs per unit computed in requirements 4 and 5 for each ich wh more accurately assigns overhead costs? d in requirements 4 and 5 for each job. Which method
