requires seven additives takes considerably more time to prepare than a similar run with two additives. Time spent on setup was not tracked. but it is a simple matter for the technician to include these numbers with the run report. IZine of the technicians is not assigned to a particular machine but rather is responsible for arranging stock on the floor. Technicians work E hours per year. The manager spends most of his time scheduling runs and attending to administrative work. In a typicaljob. total weighup time is the amount of labor time required to locate. prepare. and mix the direct materials prior to inserting them in the machine. Following is the information from one of the runs produced by Trial Run Plant for LowAmp plant. Job #TISHZ Cam I asition and Direct Cost Sample run 5.0013 lbs.: Eln/t1 HCPE l}. resin $.le'lb. 8% Kisuma. flame retardant $.lflb. 2% Com Iound Z. Antioxidant 3t]. 1 4flb. Run on Machine 1 251:} I Iunds Ier hour for EU hours Total Wei huI time If} technician hours l\" 1While a cost center can be summarized as a center that is responsible only for costs. a more thorough understanding of cost centers can be found in Noreen. E. W.. Brewer. P. (3.. & Garrison. R. H. [2 23}. Chapter 11: Responsibility Accounting Systems. [11 Managerial Arrouufingu' :l'fg'h' (pp. 534554). [th ed.). McGraw Hill LLCJ Required: Answer the Following questions showing your calculations on a professionally prepared spreadsheet. l. {3 pts.) Calculate the cost ofthe sample run #TIEDE as charged to Low-Amp based upon the current costing system utilized by Trial Run Plant? 2. [8 pts.} 1iWhat is wrong with the current system'lr [Be specic} Assuming you decide to design an Activity Based Costing System. describe how you would change the current costing system. 3. [3 pts.) Recalculate the cost of sample run #T [302 using the new Activity Based Costing Svstem. Make sure your spreadsheet follows the professional presentation requirements on the following page. Points will be deducted for not following these requirements. Trial Run Plant The Pyon Co. has an HELD building that is shared by three REED groups: HighAmp. Medium Amp and LowAmp. Adjacent to the RSLD building is Trial Run Plant. a smallscale production Facility designed For limited runs oFexperimental and commercial products. The groups rely on Trial Run Plant to produce samples oF their formulas. At Trial Run Plant. sample sizes vary From about [.000 pounds to l. pounds. The R&D groups. including Trial Run Plant. are run as cost centers \"l. Trial Run Plant also accepts special production runs For external customers that are too small For a regular plant. Trial Run Plant consists oFthree combination blendingr'extrudin g machines. which produce pellets oF compounded material. Unlike large commercial compounding machines. {which can operate 24 hours a day]. each oF these machines is run For approximately l hours per year. In the past. Trial Run Plant has costed itsjobs based on direct materials. variable machine time. and allocated overhead. Clverhead is allocated by machine time. A single plantwide machine rate pool is used For all three machines. The overhead pool includes plant Fixed costs plus the labor cost oFTrial Run Plant. Approximately 21] percent oFthe machine technicians" time is spent perFomiing general clean up and maintenance (note that each batch has a cleanup that is not part oF general cleanup and maintenance}. Machine time is calculated beFore each job by a computer program that outputs Feed rate and setup parameters. Each product is scheduled to a specic machine based on its Formulation. The cost schedule oF each machine is shown here. Capacity represents the historical annual average capacity. Batch Cleanup Capacity Variable Cost [not general {pounds per [Dollars per Technicians cleanup] Year} hour} {hours per Batch} Machine! .- E E -_ S $E~ var ear Labor Costs 1 manager at $45. per year technicians a"; $3. ' W'hile Formulations vary considerably. 91'] percent oF the blends are either resin or Flameretardant .- magnesium hydroxide. These bulky materials are normally ordered one or two weeks ahead oF time and take up much oF the oor space. The additives are quite standard and are kept in stock. W'eighups and general setup are time consuming and vary From job to job; a Formulation that