Ripken Products produces four chemical products: Abolish (A), Banish (B), Cancel (C), and Delete (D). The company has been using the traditional volume-based costing to account for its manufacturing costs. Under this costing system, the company charges manufacturing overhead costs to these products using direct labor dollars as an allocation base. The VP of Ripken's production department has expressed his dissatisfaction with the timeliness, usefulness and accuracy of the Accounting Department's monthly manufacturing control reports. The CEO, Paul Richards has also expressed his dissatisfaction with the current cost accounting system. In recent months, almost no information in these reports has been used to make decisions regarding managing production in the plant. The Controller has suggested replacing the current traditional volume-based costing system with the Activity-based costing system. Ripken's management team has suggested preparing reports for each costing system in order to decide which one provides the most accurate information and therefore, would be better suited to use in the internal decision-making process related to manufacturing operations. Ripken's Controller has turned the project over to you, Certified Management Accountant, with a completion date of July 21, midnight. To begin the project, you have gathered the following information and created various tables to assist you and your staff to complete the project. The company's 2020 manufacturing budget included the following amounts: direct material costs of $900,000 direct labor costs of $840,000 manufacturing overhead of $1,680,000 You have instructed your staff to complete Table 1 (an Excel Spreadsheet) using the above information by first calculating the predetermined overhead rate and applying it to the products A-D. With this information added to the table, total manufacturing cost can then be calculated and added to the table along with the calculated manufacturing cost per unit. Table 1: 2020 Estimated Manufacturing Costs (using Traditional Volume-Based Costing B C D TOTAL Direct Material Cost $90,000 $90,000 $180,000 $540,000 $900,000 Direct Labor Cost 84,000 84,000 168,000 504,000 840,000 Manufacturing Overhead Total Manufacturing Cost Units Produced 342,000 342,000 684,000 684,000 Cost per Unit The company's 2020 pro forma income statement is presented in Table 2. There was no inventory on December 31, 2019 and it plans to have no inventory of any product on December 31, 2020. Table 2: 2020 Pro Forma Income Statement B D $410,400 $376,200 $957,600 $2,052,000 TOTAL $3796,200 Sales Cost of Goods Sold Gross Profit Operating Expenses Profit Before Taxes 34,594 31,712 80,721 172.973 320,000 $56,200 In addition, Ripken's management team has identified the following information about its overhead activity cost pools and the assigned manufacturing overhead cost to each activity within the cost pool of activities: Table 3: Estimated Manufacturing Overhead (2020) Purchasing $72,000 Machine setups for production runs 92,500 Material movements 36,000 Machine depreciation 840,000 Facility rent 480,000 Other manufacturing overhead 159,500 Total $1,680,000 The accounting staff has communicated with various departments within the company to acquire the following information: Table 4: Transactions by Product (2020 Estimates) Activity A B D TOTAL POs Written 180 18 126 36 360 #of production run setups 148 37 74 111 Material movements 600 120 360 120 1,200 Machine hours 10,500 3,500 28,000 28,000 70,000 Work cell size in sq feet 6,400 3,200 16,000 6,400 32,000 370 You, the Certified Management Accountant, have used the information provided in Table 3 and Table 4 to construct the following Table 5 Cost per Transaction Calculations (2020 Estimates). Table 5: Cost per transaction Calculations (2020 Estimates) Assigned Activity Manufacturing Driver Activity Activity Cost Pool Overhead Amount Rate Purchasing $72,000 Machine Setups 92,500 Material Movements 36,000 Machine Cost 840,000 Facility Rent 480,000 Other Manufacturing Overhead 159,500 *Other Manufacturing Overhead represents various overhead costs for which the cost-per-transaction is too expensive to determino. The Chief Management Accountant and the Controller thinks it best to allocate these costs (9.5% of total overhead) on a machine-hour basis. The following table will be used to assign the total manufacturing overhead costs to the different products A-D based upon their usage of the activity driver. Accounting staff will complete this table using data from previous information provided. Table 6: Manufacturing Overhead Cost Assignment for 2020 using Activity Based Costing Activity Activity Cost Pool Rate B D TOTAL Purchasing Machine Setups Material Movements Machine Cost Facility Rent Other Manuf. Overhead Total Manuf. Overhead Table 7 will also need to be completed by the Accounting Department and will provide the estimated manufacturing costs for each product in order to calculate the total manufacturing cost per unit for each of the products A-D using the activity-based costing system. Requirements: You are to prepare a report illustrating and discussing your findings in using the traditional volume-based and activity-based costing systems. You illustrate by presenting completed tables 1-7. You discuss your findings by providing concepts, advantages, disadvantages of each costing system. You will need to summarize your findings and suggesting which system is the most accurate to use in making decisions. Defend your decision. Your report should have a cover page. On the cover page you will prepare it in accordance with either the MLA or APA guidelines. If you are not familiar with the APA, search the OWL data base at the Purdue University website or check with an ACC librarian. Your paper should be organized and easy for the reader to follow. It should be prepared as a professional working in the field of accounting with a publicly traded corporation. Please keep in mind, a well written paper will pay close attention to the organization of the paper. The reader should be able to easily follow the topics being discussed. Spelling and sentence structure are also important. There is no set length for the paper. Rubric: Requirement 1: Complete table 1 with information provided using the traditional volume- based costing system. Possible points = 5 points Requirement 2: Complete table 2 with the information provided from table 1. Possible points=5 points Requirement 3: Complete table 5 with the information from tables 3 & 4 using the activity-based costing system. Possible points=5 points Requirement 4: Complete table 6 with information from tables 4 & t using the activity- based costing system. Possible points = 5 points Requirement 5: Complete table 7 with information from table 1 and table 6. Possible points - 5 points. Requirement 6: Prepare a word document which would include: Possible points = 15 points. a. Cover sheet b. Introduction to the report c. Traditional volume-based costing 5 points Requirement 6: Prepare a word document which would include: Possible points = 15 points. a. Cover sheet b. Introduction to the report c. Traditional volume-based costing a. Concepts relating to this costing system b. Advantages and disadvantages of using this costing system c. Provide your completed tables relating to this costing system d. Activity-based costing a. Concepts relating to this costing system 4 b. Advantages and disadvantages of using this costing system c. Provide your completed tables relating to this costing system e. Summary of your findings a. Suggestion: present the tables that illustrate the gross margin of each product under each costing system. b. Give your analysis supporting it with concepts from the textbook f. Sentence structure, spelling should be professional. 8. When paraphrasing other authors remarks, give them credit. h. Citations are in the body of the paper and references are located in the last section of the paper and labeled as such. No reference without a citation; no citation without a reference