Please assist with Part B only. I have solved for parts of step one but I am missing the value for "Production Order Related Costs" and "Total inventory, recieving and shipping" For Part 2, I am missing the value for Partsx Units.

OMEGA OPTICAL INDIVIDUAL PROJECT FALL 2016 REQUIRED: Read the case and answer the questions below using the workspaces provided. To receive credit you must show your calculations and write your answers in the spaces provided. We must ask you to handwrite your answers. Hand your project in to the accounting lab 133MH during lab hours on or before Tuesday November 1st at 6PM. YOUR NAME YOUR BLACKBOARD USER ID YOUR INSTRUCTOR'S NAME YOUR RECEIPT NUMBER (lab assistants will give you this) CASE FACTS: Omega Optical is a specialist manufacturer of optical instruments. Omega has recently expanded its core product market of binoculars into making eyepieces for microscopes / telescopes, and screw-on lenses for digital SLR cameras. The firm believes that it makes little money selling binoculars and that these new markets have great profit potential. Somewhat to Omega's surprise, it finds it tough to make money with eyepieces. As of now, the firm appears to be selling the product at a low profit margin. Yet, Omega faces intense price pressure in this segment, and thinks that it might have to lower prices by 10% or more to stay competitive. The market for binoculars has been stable recently and Omega expects the trends to continue for the near future. Omega is most excited about entering the market for screw-on lenses for digital cameras. Although current volumes are small (relatively), Omega believes that there is substantial market potential for this product. Leveraging its excellent reputation for optics and lenses, Omega believes that it could reach and sustain two times the current volume of this product. This strategy also seems to make sense financially as this product looks like the most profitable of the three lines, per the firm's accounting records. The following table provides key information about the product lines. (Note: All data have been disguised for confidentiality. However, relations among data items have been preserved.) 1 OMEGA OPTICAL INDIVIDUAL PROJECT FALL 2016 Binoculars Camera Lens 100,000 40,000 28,000 $80.00 $160.00 $196.00 39.60 20.40 55.00 40.40 63.50 48.50 Eyepieces Sales volume (units) Selling Price TRACEABLE COSTS Per Unit Direct Costs of Labor & Materials Per Unit Variable Costs of Licensing & Patent fees OVERHEAD Unit Profit Margin After Deducting Traceable Costs and Overhead ? ? ? ? ? ? Labor hours / unit 2 4 5 Currently, the firm incurs a total of $3,100,000 in overhead costs per period. Currently Omega allocates this overhead among product lines using the number of labor hours used by each product line. Omega produces on a just in time basis so there are no significant work in process or finished goods inventories at the end of the accounting period. Required for part A A. Determine the overhead allocation rate that Omega is currently using to assign overhead costs, and then calculate the profit per unit using that rate. Use the template on the next page to present your answers OMEGA OPTICAL INDIVIDUAL PROJECT FALL 2016 Step 1. Total direct labor hours producing eyepieces? X = Step 2. Total direct labor hours producing binoculars? X = Step 3. Total direct labor hours producing camera lens? X = Step 4: Total direct labor hours producing all 3 products + + = Step 5: Overhead rate per direct labor hour: divided by Step 6: = Overhead per unit for eyepieces X Step 7: = Overhead per unit for binoculars X Step 8: = Overhead per unit for camera lens X = Step 9: Profit per unit for eyepieces minus minus minus = Step 10: Profit per unit for binoculars minus minus minus = Step 11: Profit per unit for camera lens minus = minus minus OMEGA OPTICAL INDIVIDUAL PROJECT FALL 2016 Omega' management realizes that moving to camera lenses is a major shift in their product and market focus. Plus, they know that factory personnel have complained about the increased coordination required for producing camera lenses. Thus, management wants us to conduct a more detailed study of product costs. We collect the following data. Eyepieces Sales volume (units) 100,000 Machine hours 5,000 # of batches 20 # of Components in each unit of product 8 # of receiving transactions 1,000 # of inspections 160 Binoculars 40,000 19,000 70 20 1,250 400 Camera Lens 28,000 28,000 112 40 3,500 2,240 Analyzing the overhead, you discover the following: Item Labor related Machine related Production order costs Other Set Up Costs Parts administration Inventory management Inspection and Quality Control Costs Total Amount $849,720 581,316 411,248 551,252 286,280 232,950 187,234 $3,100,000 You wonder how best to allocate these costs into cost pools. You settle on forming a total of 6 pools. Pool 1: Labor related costs. Experience shows that for Omega Optical direct labor hours are what drives these costs and causes them to vary. Pool 2: Machine related costs. These are driven by machine hours Pool 3: Cost related to executing a production order (this would include production order costs and other set up costs), allocated using the number of batches. Pool 4: Related to parts administration, which will be allocated based on the number of components in each product multiplied times the number of units Pool 5: Costs related to inventory management. These costs are allocated based on the number of receiving transactions. OMEGA OPTICAL INDIVIDUAL PROJECT FALL 2016 Pool 6: Costs related to inspections and quality control. These costs would be allocated based on the number of inspections. Requirements of parts B to G: Now using activity base costing: B. Summarize the total amounts in each of the six cost pools and then divide by the cost driver activity (from the data we collected) to determine the cost per driver unit for each cost pool. Step 1: Total amounts in the 6 cost pools. In some cases you need to add several numbers. In other cases it is just the given number. Labor related costs= Machine related costs= Production order related costs= Parts administration= Total inventory, receiving and shipping = Inspection & Quality Control= Step 2: Total use of the cost driver. You need to combine several numbers in most cases. Labor hours= Machine hours= Number of batches= Parts x Units= Receiving Transactions= Number of inspections= Step 3. Rate per driver unit for Labor related costs (pool 1) divided by = Step 3. Rate per driver unit for Machine related costs (pool 2) divided by Step 3: = Rate per driver unit for Production order related costs (pool 3) divided by Step 3: = Rate per product line for parts administration (pool 4) divided by = Step 3: Rate per driver unit for Inventory, receiving, shipping costs (pool 5) divided by Step 3: = Rate per product line for inspections (pool 6) : = divided by = C. Next determine the total amount of overhead allocated to each of the 3 product lines. (Step 4) Total overhead for eyepieces: Pool 1 X = Pool 2 X = Pool 3 X = Pool 4 X = Pool 5 X = Pool 6 X = TOTAL OVERHEAD ALLOCATED TO EYEPIECES = Total overhead for binoculars: Pool 1 X = Pool 2 X = Pool 3 X = Pool 4 X = Pool 5 X = Pool 6 X = TOTAL OVERHEAD ALLOCATED TO BINOCULARS = Total overhead for camera lens: Pool 1 X = Pool 2 X = Pool 3 X = Pool 4 X = Pool 5 X = Pool 6 X = TOTAL OVERHEAD ALLOCATED TO CAMERA LENS D. Now compute the cost per unit of overhead using activity based costing Product Total Overhead Allocated Production in Units Overhead Cost per Unit EYEPIECES: BINOCULARS: CAMERA LENS: E. Now compute the total unit cost and the profit margin per unit using activity based costing. Product Direct materials and labor per unit Licensing, Patent fee per unit Overhead Cost per unit Total Unit Cost EYEPIECES: BINOCULARS: CAMERA LENS: Product EYEPIECES: BINOCULARS: CAMERA LENS: Selling Price Total Unit Cost Profit Margin Per Unit NOTE: ANSWERING PARTS F AND G OF OMEGA OPTICALS BELOW There is no "single" correct answer. Your answers should show some thought and professional presentation. If you are unwilling to be professional in your answer, then we are unwilling to give you full credit. Short phrase, single word scrawled answers will not receive full credit. F. Based on the ABC profit margins, what actions would you recommend for Omega' management? G. Suppose Omega was to achieve a level of sales for camera lenses equal to 56,000 units (2 times the current level). How would this affect profitability if it could produce this many by doubling the size of each batch without increasing the number of batches? NOTE: In your answer to this part you should use the numerical results you calculated in previous parts of this project, and show thought and analysis. However, it may be that there is not enough information for you to give a decisive precise answer, and so do your best to give an intelligent