PLEASE SOLVE ALL PARTS WITH EXPLANATION

P. 5 Spir s were hi12h al lhe monthlv meeling o the lop managemenl o alerwavs. nstallation was proceeding nice v on the u obs or lhe city, and the company had ust received con rmalion lhal lhe oca school board a accepted its bid to Lustall ungati n s stems un 25 school play unds Unfortunatelv not ever one was celebrating Lee Williams, the vice presu ent u the installation and trauung division, was troubled. lle has been supervising the city obs and he believes the current stem of assigning overhead costs to the obs does not accurately reflect the actual cost of overhead. "Scvora ma or things have changed since we sct our overhead rac at 21 o of diroct labour cost. Loo c plained. I've noticed that the new stems are requiring a lot of the more expensive glue and thev were lesielled lo acco umu ale un v ilnil il let ers e are using speci pick ging o uranspor the svsleus o l e sies no o L enu ve new eavyequipmenl we had lo purc La se u prepire llie gruun or he install Madison Tremblay, vice-president of sales and markcring, was quick to resnond. "I can't helieve that yau're snggcsting there's soething wrng with our bids," he rcoed. He was visibly annoyed. "This is the inst time in several years thal our sales group has been successful in increasing our markel share." he continued, "and now you want to mess with the pricing! I wanl you to explain hat to the salespeople who have just rcccived their tirst hos commisson cheques in a very long timc." Ben Clark, who designed the new system, agrced with Madison, snggesting that maybe the problem was not with thecost, was more likcly cost control. Their accountan Jordan Lcig, did no like conflict. "1 have an idea."he said. "We have bocn investigating usine a new costing systemn our manufauring plant called activity-based costing, or ABC ABC is supposed to lead to more accurate oerhead costing and it provides a better way to control overhcad costs. With a litte work, think we could adapt it to our installation services." When he offered to do an analysis and brig his recommeudalon back w the nexgnent eelinghe resl of lhe group agre wail lur ihe results belore making ay chnges lor ills usl acliou as o u enli v aud c assu all the ac Ivile ual consute resources durmg 'tu speci u Ivpe uLustallatun Lulo a ni ero cost pools. azul teu determine lhe uvethead costs llal should be assigned to cach cost pool. At the same time, he detcrmined a cost driver for cach ponl. The following table shows thesc cost pools along with the estimated ovcrhcad allocation to cach onc. ActivityCost Pools Supervision, security, maintenance Liahiliry insurancc Equipme costs Iuclirect supplies and delivery Employee benctits Cost Drivers Number of workdays Number of employccs lours of operation Leueth in ieres Dirccr labour cost Kstimated (Overhead Kstimated se per Activity S 450,000 1,500 990,000 250,000 150,000 12.000 250,000 $600,000 1,040. Then, based on the information used to prepare the bids, Jordan detcrmined that cach of the 25 projccts for the school board would require the following overhead activitics Activity Cost Pools Supervision, security, maintenance Liability insurance Equipment costs Indirect supplies and delivery Employee benefits Cost Drivers Estimated Use per Job Number of workdays Number of employees Hours of operation Length in metres Direct labour cost 30 240 3,000 $12,000 The material costs for cach project were expected to he S13,000 Instructions a. Calculate the estimated cost s type ofinstalation using both the tradional method and activity-hased costing h. Given the information calculated in part (a), make a recommendation to the management of Waterways as to what action they should take. e. Explain why you think Walerways' current bidding prcess would lead to increased markel share. P. 5 Spir s were hi12h al lhe monthlv meeling o the lop managemenl o alerwavs. nstallation was proceeding nice v on the u obs or lhe city, and the company had ust received con rmalion lhal lhe oca school board a accepted its bid to Lustall ungati n s stems un 25 school play unds Unfortunatelv not ever one was celebrating Lee Williams, the vice presu ent u the installation and trauung division, was troubled. lle has been supervising the city obs and he believes the current stem of assigning overhead costs to the obs does not accurately reflect the actual cost of overhead. "Scvora ma or things have changed since we sct our overhead rac at 21 o of diroct labour cost. Loo c plained. I've noticed that the new stems are requiring a lot of the more expensive glue and thev were lesielled lo acco umu ale un v ilnil il let ers e are using speci pick ging o uranspor the svsleus o l e sies no o L enu ve new eavyequipmenl we had lo purc La se u prepire llie gruun or he install Madison Tremblay, vice-president of sales and markcring, was quick to resnond. "I can't helieve that yau're snggcsting there's soething wrng with our bids," he rcoed. He was visibly annoyed. "This is the inst time in several years thal our sales group has been successful in increasing our markel share." he continued, "and now you want to mess with the pricing! I wanl you to explain hat to the salespeople who have just rcccived their tirst hos commisson cheques in a very long timc." Ben Clark, who designed the new system, agrced with Madison, snggesting that maybe the problem was not with thecost, was more likcly cost control. Their accountan Jordan Lcig, did no like conflict. "1 have an idea."he said. "We have bocn investigating usine a new costing systemn our manufauring plant called activity-based costing, or ABC ABC is supposed to lead to more accurate oerhead costing and it provides a better way to control overhcad costs. With a litte work, think we could adapt it to our installation services." When he offered to do an analysis and brig his recommeudalon back w the nexgnent eelinghe resl of lhe group agre wail lur ihe results belore making ay chnges lor ills usl acliou as o u enli v aud c assu all the ac Ivile ual consute resources durmg 'tu speci u Ivpe uLustallatun Lulo a ni ero cost pools. azul teu determine lhe uvethead costs llal should be assigned to cach cost pool. At the same time, he detcrmined a cost driver for cach ponl. The following table shows thesc cost pools along with the estimated ovcrhcad allocation to cach onc. ActivityCost Pools Supervision, security, maintenance Liahiliry insurancc Equipme costs Iuclirect supplies and delivery Employee benctits Cost Drivers Number of workdays Number of employccs lours of operation Leueth in ieres Dirccr labour cost Kstimated (Overhead Kstimated se per Activity S 450,000 1,500 990,000 250,000 150,000 12.000 250,000 $600,000 1,040. Then, based on the information used to prepare the bids, Jordan detcrmined that cach of the 25 projccts for the school board would require the following overhead activitics Activity Cost Pools Supervision, security, maintenance Liability insurance Equipment costs Indirect supplies and delivery Employee benefits Cost Drivers Estimated Use per Job Number of workdays Number of employees Hours of operation Length in metres Direct labour cost 30 240 3,000 $12,000 The material costs for cach project were expected to he S13,000 Instructions a. Calculate the estimated cost s type ofinstalation using both the tradional method and activity-hased costing h. Given the information calculated in part (a), make a recommendation to the management of Waterways as to what action they should take. e. Explain why you think Walerways' current bidding prcess would lead to increased markel share