Several years after reengineering its production process, Zeke Corp. hired a new controller, Tammy English. She developed an ABC system very similar to the one used by Zeke's chief rival, Hollingsworth. Part of the reason English developed the ABC system was that Zeke'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, Zeke had used a plantwide overhead rate based on direct labour hours that was developed years ago. (Click the icon to view the overhead costs and budgeted data.) Requirements Requirement 1. Compute the gross profit per wheel if managers rely on the ABC unit cost data. Begin by computing the total costs. Zeke i Data Table Total cost per unit using ABC data Standard Deluxe Manufacturing Overhead Costs per Unit Standard Deluxe ABC costs..... $ 194.79 $ 385.35 Plantwide overhead rate s 207.40 $ 352.68 Total manufacturing cost The following data are budgeted for the company's Standard and Deluxe models for next year: Now compute the gross profit. Zeke Standard Deluxe Gross profit per unit using ABC data Sale price per wheel S 480.00 $ 650.00 Standard Deluxe Direct materials per wheel .... 34.50 48.25 Direct labour per wheel 45.10 53.50 Print Done Gross profit Requirement 2. Compute the gross profit per wheel if the managers rely on the plantwide allocation cost data. Begin by computing the total manufacturing costs. Data Table Zeke Total cost per unit using plantwide overhead rate Standard Deluxe Manufacturing Overhead Costs per Unit Standard Deluxe ABC costs... $ 194.79 S 365.35 ....... Plantwide overhead rate ...... $ 207.46 S 352.68 Total manufacturing cost The following data are budgeted for the company's Standard and Deluxe models for next year: Now compute the gross profit per wheel if the managers rely on the plantwide allocation cost data Standard Deluxe Zeke 480.00 $ 650.00 Gross profit per unit using plantwide overhead rate Sale price per wheel ........ S Direct materials per wheel ... 34.50 48.25 Standard Deluxe Direct labour per wheel ... 45.10 53.50 Print Done Gross profit ---- lille dan Choose from any list or enter any number in the input fields and then continue to the next question. Requirement 3. Which product line is more profitable for Zeke? cost categories (activities), each The standard model is the deluxe model. Activity-based costing data generally are V cost data generated by a plantwide overhead allocation rate. ABC systems have with its own allocation base. ABC cost assignments V represent the cost of resources consumed to manufacture (and support) products. Requirement 4. Why might controller Tammy English have expected ABC to pass the cost-benefit test? Were there any warning signs that Zeke's old direct-labour-based allocation system was broken? The ABC system is likely to pass the cost-benefit test because Zeke manufactures The old cost system appears "broken" because profits have been declining even though the company Several years after reengineering its production process, Zeke Corp. hired a new controller, Tammy English. She developed an ABC system very similar to the one used by Zeke's chief rival, Hollingsworth. Part of the reason English developed the ABC system was that Zeke'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, Zeke had used a plantwide overhead rate based on direct labour hours that was developed years ago. (Click the icon to view the overhead costs and budgeted data.) Requirements Requirement 1. Compute the gross profit per wheel if managers rely on the ABC unit cost data. Begin by computing the total costs. Zeke i Data Table Total cost per unit using ABC data Standard Deluxe Manufacturing Overhead Costs per Unit Standard Deluxe ABC costs..... $ 194.79 $ 385.35 Plantwide overhead rate s 207.40 $ 352.68 Total manufacturing cost The following data are budgeted for the company's Standard and Deluxe models for next year: Now compute the gross profit. Zeke Standard Deluxe Gross profit per unit using ABC data Sale price per wheel S 480.00 $ 650.00 Standard Deluxe Direct materials per wheel .... 34.50 48.25 Direct labour per wheel 45.10 53.50 Print Done Gross profit Requirement 2. Compute the gross profit per wheel if the managers rely on the plantwide allocation cost data. Begin by computing the total manufacturing costs. Data Table Zeke Total cost per unit using plantwide overhead rate Standard Deluxe Manufacturing Overhead Costs per Unit Standard Deluxe ABC costs... $ 194.79 S 365.35 ....... Plantwide overhead rate ...... $ 207.46 S 352.68 Total manufacturing cost The following data are budgeted for the company's Standard and Deluxe models for next year: Now compute the gross profit per wheel if the managers rely on the plantwide allocation cost data Standard Deluxe Zeke 480.00 $ 650.00 Gross profit per unit using plantwide overhead rate Sale price per wheel ........ S Direct materials per wheel ... 34.50 48.25 Standard Deluxe Direct labour per wheel ... 45.10 53.50 Print Done Gross profit ---- lille dan Choose from any list or enter any number in the input fields and then continue to the next question. Requirement 3. Which product line is more profitable for Zeke? cost categories (activities), each The standard model is the deluxe model. Activity-based costing data generally are V cost data generated by a plantwide overhead allocation rate. ABC systems have with its own allocation base. ABC cost assignments V represent the cost of resources consumed to manufacture (and support) products. Requirement 4. Why might controller Tammy English have expected ABC to pass the cost-benefit test? Were there any warning signs that Zeke's old direct-labour-based allocation system was broken? The ABC system is likely to pass the cost-benefit test because Zeke manufactures The old cost system appears "broken" because profits have been declining even though the company