PT DCU produce 3 type of shoes : jogging, futsal, dan basket. The overhead cost for producing these three shoes presented in general ledger as follow.

Management decides that all overhead costs only have four cost drivers presented as follow

Number of setup

Direct labor hours

Machine hours

Number of purchase orders

Required:

a. Please calculate allocation of overhead cost using ABC system of each product

b. Refer to the case, please identify the type of cost driver based on common classification system

c. Please provide your recommendation to manage non value added activity based on the case

Payroll taxes $1,000 Machine maintenance $500 Purchasing Dept. labor $4,000 Fringe benefits $2,000 Purchasing Dept. Supplies $250 Batch production supervisor salary $1250 Equipment depreciation $750 Electricity $1,250 Setup material expense $750 Unemployment insurance $1,500 Let's also assume that each product uses the following quantity of overhead cost drivers: Base Jogging Futsal Basket Total Direct labor hours 300 300 1,000 400 Machine hours 100 100 50 250 Purchase orders 50 20 30 100 Number of setup 70 20 10 100