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7. ACTIVITY-BASED COSTING AND JOB-ORDER COSTS. Bernelli Machining oper- ates as a job shop making various metal parts for tractors. It has several large customers across the country who order parts when their own facilities run out of capacity. Each job is unique, requiring its own labor, materials, and support activities. Bern charges $5,000,000 of plant and back office overhead out on 80,000 machine hou customers, however, are starting to ask Bernelli to justify what he charges them, s Bernelli is thinking about instituting an activity-based cost system. All labor is inc one of the activity pools. The following table contains the information Joe has lated on his company's operations elli currently accumu umu Bernelli Machining Driver Frequency 80,000 6,000 10,000 15,000 10,000 20,000 Cost of Activity Activity Machining Set-up Inspectiorn Shipping Customer service Invoicing Total Machine hours Set-up hours nspection hours Shipments made Orders taken Invoices mailed 2,800,000 300,000 350,000 $630,000 $360,000 $560,000 $5,000,000 Bernelli has just completed three jobs. The details for these jobs are contained in the table below Bernelli Machining Activity Materials Machine Hours Set-up hours Inspection hours Shipments Orders Invoices ob 101 $150,000 500 10 25 Job 102 $50,000 250 Job 103 $100,000 100 30 100 40 REQUIRED a. Calculate the current overhead rate per machine hour b. Calculate the cost of each of the jobs using machine hours as the rate. C. Joe targets a 25% margin on each job he does. How much would he charge for each of these jobs? d. Calculate the ABC charging rates. e. Recalculate the costs for each job using these new rates Once again calculate the price Joe would charge for each of these jobs. a. What does a comparison of the results suggest? Be sperit 9