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ourse contents Homework problems 4-1. problem Gaylord Corp, manufactures steering wheels for the auto industry. Gaylord makes both a standard steeering wheel with hand-levers for
ourse contents Homework problems 4-1. problem Gaylord Corp, manufactures steering wheels for the auto industry. Gaylord makes both a standard steeering wheel with hand-levers for adjustments and a deluxe steering wheel with electronic adjustments and the ability to heat the steering wheel. The company has been using a plant-wide overhead rate based on direct labor hours to allocate its overhead to each model. Tom Smith, the CFO, is convinced that an activity- based costing (ABC) system will provide better information about the costs and profitability of each steering wheel model which should lead to better decisions about whether the company should focus on one model or the other. He has pulled the following information about overhead costs from the past year and inserted activity-based costing (ABC) information: tivity Allocation Base Activity Cost Allocation Rate $6.50 per part $350.00 per setup $31.00 per part Materials handling Numb l ine setup er of parts Number of setups Inspection of parts Number of parts Finishing ishing direct labor hours$51.00 Standard Deluxe ts per steering wheel 8.0 20 1.0 3.0 3.8 20.0 tups per 1,000 steering wheel Finishing direct labor hours per steering Total direct labor hours per steering wheel The company's managers expect to produce 1,000 units of each model during the upcoming year. Answer the following questions. Each question is worth 1 point. 1. Compute the total budgeted manufacturing overhead cost for the upcoming year using ABC information. $743,000 2.7 ou are correct. r receipt no. is 162-3408Previous Tres 2. Compute the manufacturing overhead cost per steering wheel of the standard model using ABC. $283.00 ou are correct. ur receipt no. is 162-8801 3. Compute the manufacturing overhead cost per steering wheel of the deluxe model using ABC. $460.00 ou are correct. r receipt no. is 162-4009 4. Compute the manufacturing overhead cost per deluxe steering wheel using Gaylord's traditional plant-wide overhead rate. 114.31 Submit Answer S. If Gaylord continues with the traditional method of allocating manufacturing overhead based on direct labor hours instead of switching to the Activity-Based Costing system, by how much will the deluxe steering wheel model be over- or under-costed per unit? Enter an under-costed amount as a negative number and an over-costed amount as a positive number. 434.38 Tries 8/10 Previous Tries Submit Answer Tries 2/10 Previous Tries
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