Pumpkin Bags (PB) is a designer of high-quality backpacks and purses. Each design is made in small batches. Each spring, PB comes out with new designs for the backpack and for the purse. The company uses these designs for a year and then moves on to the next trend. The bags are all made on the same fabrication equipment that is expected to operate at capacity. The equipment must be switched over to a new design and set up to prepare for the production of each new batch of products. When completed, each batch of products is immediately shipped to a wholesaler. Shipping costs vary with the number of shipments. Budgeted information for the year is as follows: (Click the icon to view the budgeted information.) Read the requirements. ..... Requirement 1. Identify the cost hierarchy level for each cost category. Cost Direct materialspurses Cost Hierarchy Level Output unit-level cost Output unit-level cost Direct materialsbackpacks Direct laborpurses Output unit-level cost Direct laborbackpacks Output unit-level cost Batch-level cost Setup Shipping Design Batch-level cost Product-sustaining cost Plant utilities and administration Facility-sustaining cost Requirement 2. Identify the most appropriate cost driver for each cost category. Explain briefly your choice of cost driver. Cost Cost Driver Reason Direct materialspurses Direct materialsbackpacks Direct labor-purses Direct labor-backpacks Setup Shipping Design Plant utilities and administration Shipping Batch-level cost Design Product-sustaining cost Facility-sustaining cost Plant utilities and administration Requirement 2. Identify the most appropriate cost driver for each cost category. Explain briefly your choice of cost driver Cost Cost Driver Reason Direct materials-purses Direct materials--backpacks Direct labor-purses Direct labor-backpacks The cost is determined by the number of batches. Setup The cost is determined by the number of designs, Shipping Design The cost is determined by the number of output. Plant utilities and administration The more the machines are used the higher the cost. Help me solve this Etext pages Get more help Type here to search PB comes out -X at capacity. The Requirements ts vary with the Data table 1. Identify the cost hierarchy level for each cost category. 2. Identify the most appropriate cost driver for each cost category. Explain briefly your choice of cost driver. 3. Calculate the budgeted cost per unit of cost driver for each cost category. 4. Calculate the budgeted total costs and cost per unit for each product line. 5. Explain how you could use the information in requirement 4 to reduce costs. Print Done Pumpkin Bags Budget for Costs and Activities For the Year Ended February 28, 2014 Direct materials-purses $ 303.800 Direct materials-backpacks 461.700 Direct manufacturing labor-purses 93,000 Direct manufacturing labor-backpacks 97,200 Setup 114,400 Shipping 72.400 Design 168,000 Plant utilities and administration 249,000 $ 1,559,500 Total Other budget information follows: Backpacks Purses Total Number of bags 6,075 3,100 9,175 Hours of production 1,555 2,595 4,150 Number of batches 150 50 200 Number of designs 3 3 6 Product-sustaining cost Facility-sustaining cost inistration ify the most appropriate cost driver for each cost category. Explain briefly your choice of cost driver. Cost Driver Reason ses kpacks oks
