O'Conner Company is an automotive component supplier. O'Conner has been approached by Honda's Ohio plant to consider expanding its production of part 24Z2 to a total annual quantity of 2,100 units. This part is a low-volume, complex product with a high gross margin that is based on a proposed (quoted) unit sales price of $8.20. O'Conner uses a traditional costing system that allocates indirect manufacturing costs based on direct-labor costs. The rate currently used to allocate indirect manufacturing costs is 400% of direct-labor cost. This rate is based on the $4,886,000 annual factory overhead cost divided by $1,221,500 annual direct-labor cost. To produce 2,100 units of 2422 requires $6,300 of direct materials and $840 of direct labor. The unit cost and gross margin percentage for part 24Z2 based on the traditional cost system are computed as follows: (Click the icon to view the traditional cost data.) The management of O'Conner decided to examine the effectiveness of their traditional costing system versus an activity-based costing system. The following data have been collected by a team consisting of accounting and engineering analysts: (Click the icon to view the ABC cost data.) Read the requirements Data Table - X Requirement 1. Prepare a schedule calculating the unit cost and gross margin of part 2422 using the activity-based costing approach. Use the cost drivers given as cost-allocation bases. Factory Overhead Costs (Annual) Data Table 969,000 Annual 120,000 Cost-Allocation Base Cost Activity Center Quality Production scheduling Setup Shipping Shipping administration Production Per unit 1,280,000 441,000 Total Cost/Activity Center: Quality: Production scheduling: Setup: Shipping Shipping administration: (12,100) 3.00 Direct material $ 96,000 1,980,000 Direct labor 6,300 $ 840 3,360 0.40 1.60 $ 4.886,000 Total indirect production cost Indirect production: (400% of direct labor) $ 10,500 Total cost $ Production: 5.00 8.20 Sales price quoted Total indirect cost $ Gross margin 3.20 Activity Center: Cost Drivers Annual Cost-Driver Quantity Quality: Number of pieces scrapped 17,000 Production scheduling and setup: Number of setups 800 Shipping: Number of containers shipped 63,000 Shipping administration: Number of shipments 1.600 Production: Number of machine hours 11.000 The accounting and engineering team has performed activity analysis and provides the following estimates for the total quantity of cost drivers to be used to produce 2,100 units of part 2422 39.0 % Gross margin percentage Print Done Cost Driver Cost-Driver Consumption 140 9 Pieces scrapped Setups Containers shipped Shipments Machine hours 14 Choose from any list or enter any number in the input fields and then click Check Answer. 8 Clear All 11 10 parts Answer remaining