p, and engineering. Interviews with the department personnel and examination of time records yield the following detailed -ely. rma (CIL Requirements d th 1. Data table juir sting arm 2. man 3. adr Usage of Cost Drivers by Customer Contract Manufacturing Janek Mystiland Overhead in 2017 State Motors Motors Auto achi Cost Driver Compute the manufacturing overhead allocated to each customer in 2017 using the simple costing system that uses machine-hours as the allocation base. Compute the manufacturing overhead allocated to each customer in 2017 using department-based manufacturing overhead rates. Comment on your answers in requirements 1 and 2. Which customer do you think was complaining about being overcharged in the simple system? If the new department-based rates are used to price contracts, which customer(s) will be unhappy? How would you respond to these concerns? How else might AP use the information available from its department-by-department analysis of manufacturing overhead costs? AP's managers are wondering if they should further refine the department-by-department costing system into an ABC system by identifying different activities within each department. Under what conditions would it not be worthwhile to further refine the department costing system into an ABC system? Department Design Engineering $ 150 250 100 CAD-design-hours Engineering-hours 4. 35,000 25,000 220,000 130 100 270 Production Machine-hours 300 3,700 1,000 5. $ 280,000 Total Print Done Print Done Automotive Products (AP) designs and produces automotive parts. In 2017, actual manufacturing overhead is $280,000. AP's simple costing system allocates manufacturing overhead to its three customers based on machine-hours and prices its contracts based on full costs. One of its customers has regularly complained of being charged noncompetitive prices, so AP's controller Doug Smith realizes that it is time to examine the consumption of overhead resources more closely. He knows that there are three main departments that consume overhead resources: design, production, and engineering. Interviews with the department personnel and examination of time records yield the following detailed information: B (Click the icon to view the information.) Read the requirements. Determine the formula needed to calculate overhead using the simple costing method and then calculate AP's manufacturing overhead rate for 2017. (Round your answer to the nearest cent.) Total machine hours = Total manufacturing overhead 280,000 Manufacturing overhead rate 56.00 per machine hour $ 5,000 = $ Calculate the overhead allocated to each customer using the simple costing method. (Round your answers to the nearest whole dollar.) Machine Overhead Customer Hours Used Allocated State Motors Janek Motors Mystiland Auto Kraftprint Corporation owns a small printing press that prints leaflets, brochures, and advertising materials. Kraftprint classifies its various printing jobs as standard jobs or special jobs. i (Click the icon to view additional information.) To see how activity-based costing would affect the costs of standard and special jobs, Kraftprint collects the following information for the fiscal year 2017 that just ended. (Click the icon to view the information.) Read the requirements. Requirement 1. Calculate the cost of a standard job and a special job under the simple costing system. (Round interim calculations to three decimal places, X.XXX and your final answers to the nearest cent, X.XX.) Standard Special Job Job Simple Costing System Cost of supplies per job Direct manufacturing labor cost per job $ 130.00 $ 260.00 170.00 220.00 Indirect cost allocated to each job 634.74 634.74 $ 934.00 $ Total costs 1,114.00 Requirement 2. Calculate the cost of a standard job and a special job under the activity-based costing system. Begin by calculating the allocation rates for the following activities. (Abbreviations used: $ = Dollar, DM = Direct manufacturing, Qty. = Quantity. Round the allocation rates to the nearest cent for all activities except Administration; round Administration to five decimal places, X.XXXXX.) ABC Allocation rate Machine operations . = Green Thumb USA provides lawn care and landscaping services to commercial clients. Green Thumb USA uses activity-based costing to bid on jobs and to evaluate their profitability. Green Thumb USA reports the following budgeted annual costs: (Click the icon to view budgeted annual costs.) (Click the icon to view additional information.) Read the requirements. Lawn care $ 9,308.00 $ Landscape design 5,971.20 Total costs $ 16,253.20 Markup multiplier 150 % $ 24,379.80 Bid estimate Requirement 3. Green Thumb USA does 34 landscape designs for its customers each year. Estimate the total cost for the Shasta Office park job if Green Thumb USA allocated costs of the Landscape Design activity based on the number of landscape designs rather than the number of landscape design-hours. How much would Green Thumb USA bid to perform the job? Which cost driver do you prefer for the Landscape Design activity? Why? How much would Green Thumb USA bid to perform the job? Estimating jobs $ 974.00 Lawn care $ 9,308.00 2,744.12 $ Landscape design Total costs $ 13,026.12 Markup multiplier 150 % $ Bid estimate 19,539.18 Which cost driver do you prefer for the Landscape Design activity? Why? While the Shasta Office park landscape design is only one of 34 performed by Green Thumb USA, it accounts for as the cost driver results in a bid estimate that is too low. Using the number of landscape design-hours, making it complex than the average design. Using the number of is a more accurate measure of Green Thumb USA's costs for each job because it