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Rockford Company produces two different products, Product A and Product B. Rockford uses a traditional volume-based costing system in which direct labor hours are the
Rockford Company produces two different products, Product A and Product B. Rockford uses a traditional volume-based costing system in which direct labor hours are the allocation base. Rockford is considering switching to an ABC system by splitting its manufacturing overhead cost across three activity pools: Setup, Production, and Finishing. The cost of each activity and usage of the activity drivers are as follows: COST Usage by Product A Usage by Product B Setup (Batches) $55,000 200 batches 300 batches Production (Direct Labor Hours) $310,000 42,500 DL hours 57,500 DL hours Finishing (Machine Hours) $60,000 30 Machine hours 70 Machine hours Rockford manufactures 15,000 units of Product A and 11,250 units of Product B per month. Required: a. Calculate the predetermined overhead rate under the traditional costing system. (Round your answer to 2 decimal places.) Predetermined Overhead Rate b. Calculate the activity rate for Setup. (Round your answer to 2 decimal places.) Activity Rate per batch c. Calculate the activity rate for Production. (Round your answer to 2 decimal places.) Activity Rate per hour d. Calculate the activity rate for Finishing. Activity Rate per hour e. Calculate the indirect manufacturing costs assigned to each unit of Product A under the traditional costing system. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Indirect Manufacturing Cost per unit f. Calculate the indirect manufacturing costs assigned to each unit of Product B under the traditional costing system. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Indirect Manufacturing Cost per unit g. Calculate the indirect manufacturing costs assigned to each unit of Product A under the ABC system. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Indirect Manufacturing Cost per unit h. Calculate the indirect manufacturing costs assigned to each unit of Product B under the ABC system. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Indirect Manufacturing Cost per unit
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