Mika Hasegawa is the controller of Nakamura, Inc., an electronic After Ms. Hasegawa attended the seminar, she suggested that controls company located in Sendai. She recently attended a seminar Nakamura experiment with an ABC system in the Automotive on activity-based costing (ABC) in Tokyo. Nakamura's traditional cost Controls Department. She identified four main activities that accounting system has three cost categories: direct materials, cause indirect production costs in the department and selected direct labor, and indirect production costs. The company allocates a cost driver to use as a cost-allocation base for each activity indirect production costs on the basis of direct-labor cost. The as follows: following is the 20XO budget for the automotive controls department (in (Click the icon to view the ABC data.) thousands of Japanese yen): In 20X0 the Automotive Controls Department expects to (Click the icon to view the 200 budget.) produce 92,000 control units, use 590 quality control hours, and ship 8,500 boxes. Read the requirements. Requirement 1. Explain how Nakamura, Inc., allocates its indirect production costs using its traditional cost system. Include a computation of the allocation rate used. The traditional cost system allocates indirect production costs Select the formula(s) and then calculate the indirect cost rate(s) under the traditional cost system. (Only use as many lines as needed to show the indirect cost rate(s) used under the traditional cost system. Round the rate(s) to two decimal places, .XX.) Mika Hasegawa is the controller of Nakamura, Inc., an electronic After Ms. Hasegawa attended the seminar, she suggested that , Inc., allocates its indirect production costs using its traditional cost system. Include a computation of irect production costs the indirect cost rate(s) under the traditional cost system. (Only use as many lines as needed to show raditional cost system. Round the rate(s) to two decimal places, .XX.) Data table Data table Requirements 1. Explain how Nakamura, Inc., allocates its indirect production costs using its traditional cost system. Include a computation of the allocation rate used. 2. Explain how Nakamura, Inc., would allocate indirect production costs under Ms. Hasegawa's proposed ABC system. Include a computation of all the allocation rates used. 3. Suppose Nakamura prices its products at 35% above total production cost. An order came in from Honda for 4,000 control units. Hasegawa estimates that filling the order will require 7,000,000 of direct-materials cost and 1,900,000 of direct labor. It will require 45 hours of QC inspection time and will be shipped in 690 boxes. a. Compute the price charged for the 4,000 control units if Nakamura uses its traditional cost accounting system. b. Compute the price charged for the 4,000 control units if Nakamura uses the ABC system proposed by Ms. Hasegawa. 4. Explain why costs are different in the two costing systems. Include an indication of which costs you think are most accurate and why
