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Please show all works, thank you. Question C (Activity Based Costing): You have been hired by Speeder Manufacturing to assess and make recommendations for the
Please show all works, thank you.
Question C (Activity Based Costing): You have been hired by Speeder Manufacturing to assess and make recommendations for the profitability of its Bobblehead line of products. Speeder Manufacturing makes two types of Speeder! Bobbleheads. The Huge Speeder! Bobblehead is 15 feet tall and is sold as a lawn ornament. The Tiny Speeder! Bobblehead is 15 centimeters tall and is sold as a jewelry apparel item. Although Speeder has been manufacturing the Huge Bobblehead for years, it only recently added the Tiny Bobblehead product line. The Tiny Bobblehead is more difficult to manufacture and requires special tooling and machine setups because it is made out of pure platinum. Speeder Manufacturing has faced intense competition for both products from competing manufacturers and its sales of the Tiny Bobbleheads have recently dropped dramatically. The Speeder plant manager is convinced that this producer is intentionally selling the Tiny Bobblehead below its manufacturing cost. Production Selling price Overhead per unit* Direct materials cost per unit Direct labor cost per unit Huge Bobblehead 16,000 units 70 ? $30 $20 Tiny Bobblehead 190.000 units $15 ? $4 $5 S Number of production runs Receiving orders Machine hours Direct labor hours Engineering hours Materials moves 50 40 25,000 nachine hours 30,000 DLHS 150 hours 40 es 180 500 rs 0,000 achine hours 500.000 LHS purs 70 10 * Calculated using an overhead rate based on direct labor hours (DLHS) using the information above and the total overhead costs below. This is the current way of assigning the plant's overhead to its products. Overhead Costs Setup costs Machine costs Receiving costs Engineering costs Materials handling costs Total overhead costs $160,000 260,000 200,000 60,000 130,000 810,000 Your recommendation is to consider assigning overhead costs to each product line using Activity-based Costing (ABC). . Setup costs would be assigned using number of production runs. Machine costs would be assigned using machine hours. Receiving costs would be assigned using receiving orders. Engineering costs would be assigned using engineering hours. Materials handling costs would be assigned using materials moves. . Question C continued: 11. Using the traditional cost assignment method using the common (plant wide) overhead rate based on DLHs, how much is the overhead cost per unit produced for the: Huge Bobbleheads Tiny Bobbleheads 12. Using the Activity-based Costing (ABC) assignment method how much is the overhead cost per unit produced for the: Huge Bobbleheads Tiny BobbleheadsStep by Step Solution
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