Question 1: Long Ave Inc. manufactures two products, Standard and Deluxe. Manufacturing overhead costs consist of: Activity Overhead Cost Setting Up Machines $270,000 Machine Fabrication $510,000 Inspecting $495,000 Shipping $740,000 Purchasing $360,000 Information on the two products is as follows: Cost Driver Standard Deluxe Direct Labour Hours 350,000 156,000 Machine Setups 275 430 Machine Hours 33,850 44,400 Inspections 430 280 Parts Shipped 6,400 8,800 Purchasing Orders 320 350 Currently, the controller uses a plant-wide overhead rate based on direct labour hours to assign overhead to the Standard and Deluxe products. The president has heard of activity-based costing and wants to see how the results would differ if this system were used. Required: 1. Assign the total manufacturing overhead costs to the two products using the current plant-wide method. 2. Assign the total manufacturing overhead costs to the two products using activity-based costing (ABC). Question 2: (30 Marks) Ventana Inc. sells a single product for $48. Its management estimates the following revenues and costs for the year 2021: Net Sales $620,000 Selling expenses Variable $17,000 Direct Materials 83,000 Selling expenses Fixed 22,800 Direct Labour 75,000 Admin expenses Variable 3,400 Mfg Overhead Variable 35,000 Admin expenses - Fixed 2,500 Mfg Overhead Fixed 23,000 Required: 1 Assuming fixed costs and net sales are spread evenly throughout the year, determine Ventanas monthly break-even point in (a) units and (b) dollars. 2 Calculate the contribution margin ratio, the annual margin of safety ratio, and the annual profit 3 Determine the percentage increase of annual profits if Ventana Inc. increases its selling price by 24% and all other factors (including demand) remain constant. 4 Assume the price remains at $48 per unit and variable costs remain the same per unit, but fixed costs increase by 15% annually. Calculate the percentage increase in unit sales required to achieve the same level of annual profit calculated in required # 2 5 Determine the sales required to earn an operating income of $375,000 after tax. Ventana Inc.s income tax is 25%.