• RicohPrintingCompanyisthepublisherformanyofthelocalnewspapersandmagazines.Theypublishnineperiodicalsandseveralothertypesofliterature,includinghandoutsandpamphlets.Theyhaverecentlyadoptedanactivity-basedcostingsystemtoassignmanufacturingoverheadtoproducts.Thefollowingdatarelatetooneoftheirproducts,TheRichWeekly,andtheABCcostpools:

The Ricoh Weekly:
Annual production	20,000 units
Direct material per unit	$31
Direct labor per unit	$6

Manufacturing overhead cost pools:

Cost Pool	Cost	Cost Driver
Material ordering	$800,000	Number of Purchase orders
Materials inspection	400,000	Number of receiving reports
Equipment setup	2,000,000	Number of setups
Quality control	900,000	Number of inspections
Other	15,000,000	Direct labor cost
Total mfg. overhead	$19,100,000
Annual activity information related to cost drivers:
Cost Pool	All Products	The Ricoh Weekly
Materials ordering	100,000 orders	1,000
Materials inspection	2,000 receiving reports	300
Equipment setup	100 setups	1
Quality control	4,000 inspections	400
Other	$10,000,000 direct labor	$120,000

Calculate the overhead rate per unit of activity for each of the five cost pools.Calculate the total overhead assigned to the production of The Ricoh Weekly.Calculate the overhead cost per unit for The Ricoh Weekly.Calculate the total unit cost for The Ricoh Weekly.Suppose that Ricoh Printing allocates overhead by a traditional production volume-based method using direct labor dollars as the allocation base and one cost pool. Determine the overhead rate per direct labor dollar and the per unit overhead assigned to The Ricoh Weekly. Discuss the difference in cost allocations between the traditional method and the activity-based costing approach.

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EXERCISE #4 (3 points) Ricoh Printing Company is the publisher for many of the local newspapers and magazines. They publish nine periodicals and several other types of literature, including handouts and pamphlets. They have recently adopted an activity-based costing system to assign manufacturing overhead to products. The following data relate to one of their products, The Rich Weekly, and the ABC cost pools: The Ricoh Weekly: Annual production Direct material per unit Direct labor per unit 20,000 units $31 $6 Manufacturing overhead cost pools: Cost Pool Material ordering Materials inspection Equipment setup Quality control Other Total mfg. overhead Cost $800,000 400,000 2,000,000 900,000 15,000,000 $19,100,000 Cost Driver Number of Purchase orders Number of receiving reports Number of setups Number of inspections Direct labor cost Annual activity information related to cost drivers: Cost Pool Materials ordering Materials inspection Equipment setup Quality control Other All Products The Ricoh Weekly 100,000 orders 2,000 receiving reports 100 setups 4,000 inspections $10,000,000 direct labor 1,000 300 1 400 $120,000 Required: a. Calculate the overhead rate per unit of activity for each of the five cost pools. b. Calculate the total overhead assigned to the production of The Ricoh Weekly. c. Calculate the overhead cost per unit for The Ricoh Weekly. d. Calculate the total unit cost for The Ricoh Weekly. e. Suppose that Ricoh Printing allocates overhead by a traditional production volume-based method using direct labor dollars as the allocation base and one cost pool. Determine the overhead rate per direct labor dollar and the per unit overhead assigned to The Ricoh Weekly. Discuss the difference in cost allocations between the traditional method and the activity-based costing approach