Required A Required B Required C Compute a predetermined overhead rate for year 5 for each cost driver recommended by the employees. Also compute a predetermined rate using direct labor-hours as the allocation base. (Round "Using machines" and "Packing & shipping" answers to 2 decimal places.) Allocation Rate per run per order per lb. Activity Setting up production Processing orders Handling materials Using machines Performing quality management Packing & shipping Direct labor-hour rate per hour per insp. per unit per hour Required A Required B Required C Compute the production costs for each product for February using direct labor-hours as the allocation base and the predetermined rate computed in requirement a. (Do not round intermediate calculations.) Short 6,000 Medium $ 3,750 Tall 3,000 Direct materials $ $ Direct labor Overhead Total costs Required A Required B Required C Compute the production costs for each product for February using the cost drivers recommended by the employees and the predetermined rates computed in requirement a. (Note: Do not assume that total overhead applied to products in February will be the same for activity-based costing as it was for the labor-hour-based allocation.) (Do not round intermediate calculations.) Show less Tall Short 6,000 Medium 3,750 Direct materials $ $ $ 3,000 Direct labor Setting up production Processing orders Handling materials Using machines Performing quality management Shipping Total cost College Supply Company (CSC) makes three types of drinking glasses: short, medium, and tall. It presently applies overhead using a predetermined rate based on direct labor-hours. A group of company employees recommended that CSC switch to activity-based costing and identified the following activities, cost drivers, estimated costs, and estimated cost driver units for year 5 for each activity center. Activity Setting up production Processing orders Handling materials Using machines Providing quality management Packing and shipping Recommended Cost Driver Number of production runs Number of orders Pounds of materials Machine-hours Number of inspections Units shipped Estimated Cost $ 36,000 60,000 24,000 72,000 60,000 48,000 $300,000 Estimated Cost Driver Units 100 runs 200 orders 8,000 pounds 10,000 hours 40 inspections 20,000 units In addition, management estimated 2,000 direct labor-hours for year 5. Assume that the following cost driver volumes occurred in February, year 5. Short 1,000 $6,000 100 Medium 500 $3,750 120 Tall 400 $3,000 110 4 Number of units produced Direct materials costs Direct labor-hours Number of orders Number of production runs Pounds of material Machine-hours Number of inspections Units shipped 4 2 400 500 2 1,000 800 300 2 200 300 2. 300 Direct labor costs were $30 per hour
