Several years after reengineering its production process, Dettling Corporation hired a new controller, Alana Metzgar. She developed an ABC system very similar to the one used by Dettling's chief rival. Part of the reason Metrgar developed the ABC system was because Dettling's profits had been declining, even though the company had shifted its product mix toward the product that had appeared most profitable under the old system. Before adopting the new ABC system, the company had used a plantwide overhead rate based on direct labor hours that was developed years ago For the upcoming year, Detting's budgeted ABC manufacturing overhead allocation rates are as follows: Activity Materials handling Machine setup Insertion of parts Allocation Base Number of parts Number of setups Number of parts Finishing direct labor hours Activity Cost Allocation Rate $ 4.50 per part $ 325.00 per setup $31.00 per part Finishing $51.00 per hour The number of parts is now a feasible allocation base because Dettling recently installed a plantwide computer system. Dettling produces two wheel models: Standard and Deluxe. Budgeted data for the upcoming year are as follows: 9 Standard Deluxe Units Expected production for each model 1,000 Parts per wheel 4.0 6.0 Setups per 1,000 wheels 20.0 20.0 Finishing direct labor hours per wheel 1.0 3.0 Total direct labor hours per wheel 2.7 3.8 Use the blue shaded areas on the ENTERANSWERS tab for inputs. Always use cell references and formulas where appropriate to receive full credit. Requirements 1 Compute the total budgeted manufacturing overhead cost for the upcoming year. 2 Compute the manufacturing overhead cost per Wheel of each model using ABC. 3 Compute the company's traditional plantwide overhead rate. Use this rate to determine the manufacturing overhead cost per wheel under the traditional system Saving & Submitting Solution 1 Save file to desktop a. Create folder on desktop, and label COMPLETED EXCEL PROJECTS 2 Upload and submit your file to be graded a Navigate back to the activity window screen where you downloaded the initial spreadsheet b. Click Choose button under step 3, locate the file you just saved and click Open C Click Upload button under step d. Click Submit button under step 4 Viewing Results 1 Click on Results tab in My Accountinglab 2. Click on the Assignment you were working on 3 Click on Project link; this will bring up your Score Card 4 Within Score Card window, click on Live Comments Report (lower right) to download spreadsheet with feedback 1. Compute the total budgeted manufacturing overhead cost for the upcoming year. (Always use cell references and formulas where appropriate to receive full credit.) Total Budgeted Indirect Cost Activity Materials handling Machine setups Insertion of parts Finishing Total budgeted indirect costs 2. Compute the manufacturing overhead cost per Wheel of each model using ABC. (Always use cell references and formulas where appropriate to receive full credit.) Activity Allocated Activity Cost Per Wheel Standard Deluxe Materials handling Machine setups Insertion of parts Finishing Total ABC allocated indirect cost 3. Compute the company's traditional plantwide overhead rate. (Always use cell references and formulas where appropriate to receive full credit.) Plant overhead rate per direct labor hour Use this rate to determine the manufacturing overhead cost per wheel under the traditional system. Manufacturing overhead cost per wheel Standard Deluxe Step Instructions 1 2 1. Compute the total budgeted manufacturing overhead cost for the upcoming year. (Always use cell references and formulas where appropriate to receive full credit.) 2. Compute the manufacturing overhead cost per wheel of each model using ABC. (Always use cell references and formulas where appropriate to receive full credit.) 3. Compute the company's traditional plantwide overhead rate. Use this rate to determine the manufacturing overhead cost per wheel under the traditional system. 3
