Standard Deluxe Units produced and sold 20,000 10,000 Sales price per unit $150 $200 Direct labor hours Molding 10,000 5,000 Direct labor hours Assembly and Packaging 20,000 10,000 Machine hours Molding 12,000 10,000 Direct labor rate $20 $20 DM cost $40 $60 Molding Assembly and Packaging Manufacturing overhead costs (all currently assumed to be fixed) $787,500 $562,500 Total selling and administrative expenses are $1,200,000 Activity Activity Measure Associated Manufacturing Overhead Machining Machine hours in Molding Department $417,500 Assembly and Packaging Direct labor hours in Assembly and Packaging Department 282,500 Order Processing Number of customer orders 230,000 Setups Setup hours 340,000 Other (unused capacity) 80,000 Standard Deluxe Average order size (units) 400 50 setups required for each order 1 3 Sales commission traceable to each product 5 sales commission 10 sales commission Traceable fixed advertising $150,000 $200,000 Answer the following questions If BLP, Inc uses ABC cost allocation and ABC is deemed to be most accurate, what can you say about the calculated costs of the Standard and Deluxe product under the plantwide and departmental methods (i e , would there have been undercosting or overcosting of each product ) Again, if ABC cost allocation is deemed to be most accurate, how would prices differ under that method compared to the plantwide and departmental methods (i e , would there have been underpricing or overpricing of each product ) Using the traditional allocation method, which product, if any, would BLP, Inc possibly have considered dropping Using the departmental allocation method, which product, if any, would BLP, Inc possibly have considered dropping xUsing the ABC allocation method, which product, if any, would BLP, Inc possibly have considered dropping Should it drop that product Indicate the financial impact of that decision i e , any additional costs or cost savings) What will net operating income be without that product if you suggest dropping one After performing these calculations, you decide to use 2022 monthly data to try and separate manufacturing overhead in the Molding Department into fixed and variable components by applying the high low method The 2022 data is shown here Year Machine Hours in the Molding Department Molding Department Total Manufacturing Overhead January 1,500 $59,750 February 1,980 $66,100 March 1,875 $66,815 April 2,045 $71,550 May 3,625 $82,060 June 1,420 $62,175 July 2,015 $69,800 August 1,540 $64,350 September 1,020 $55,725 October 1,250 $60,400 November 2,590 $77,275 December 1,140 $51,500 What is the variable manufacturing overhead cost estimated to be in the Molding Department (rounded to the nearest cent i e , $XX XX) What is the fixed manufacturing overhead cost estimated to be in the Molding Department (rounded to the nearest whole dollar) If 1,675, 2,000, and 2,300 machine hours are estimated to be used in January, February, and March 2023, respectively, in the Molding Department, what is the expected Molding Department Manufacturing Overhead Cost for that month Show the variable, fixed, and total amount If Molding department depreciation is expected to be $12,500 of fixed manufacturing overhead cost each month, prepare a partial manufacturing overhead budget only for the Molding department for the first quarter of 2023 making sure to also show the related cash disbursements Assume BLP uses departmental allocation rates One of BLPs customers would like to place a special order for tents that are a hybrid between the Standard and Deluxe models The hybrid will have the same direct material requirements as the Deluxe tent and the same direct labor requirements per unit and molding MH requirements of the Standard tent Assuming that the company has enough capacity to satisfy the special order along with current regular business, what is the minimum price that BLP should accept per unit for the special order Use your calculations from 21 to help you with this Other than the portion of Molding overhead that is variable, assume all other Molding and Assembly and Packaging manufacturing overhead is considered fixed Also assume that other than a $10 per unit commission associated with the special order, all other selling and administrative expenses are fixed

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Standard Deluxe Units produced and sold 20,000 10,000 Sales price per unit $150 $200 Direct labor hours Molding 10,000 5,000 Direct labor hours Assembly and

	Standard	Deluxe
Units produced and sold	20,000	10,000
Sales price per unit	$150	$200
Direct labor hours Molding	10,000	5,000
Direct labor hours Assembly and Packaging	20,000	10,000
Machine hours Molding	12,000	10,000
Direct labor rate	$20	$20
DM cost	$40	$60

	Molding	Assembly and Packaging
Manufacturing overhead costs (all currently assumed to be fixed)	$787,500	$562,500

Total selling and administrative expenses are $1,200,000.

Activity	Activity Measure	Associated Manufacturing Overhead
Machining	Machine-hours in Molding Department	$417,500
Assembly and Packaging	Direct labor hours in Assembly and Packaging Department	282,500
Order Processing	Number of customer orders	230,000
Setups	Setup hours	340,000
Other (unused capacity)		80,000

	Standard	Deluxe
Average order size (units)	400	50
# setups required for each order	1	3
Sales commission traceable to each product	5% sales commission	10% sales commission
Traceable fixed advertising	$150,000	$200,000

Answer the following questions:

If BLP, Inc. uses ABC cost allocation and ABC is deemed to be most accurate, what can you say about the calculated costs of the Standard and Deluxe product under the plantwide and departmental methods (i.e., would there have been undercosting or overcosting of each product?)

Again, if ABC cost allocation is deemed to be most accurate, how would prices differ under that method compared to the plantwide and departmental methods (i.e., would there have been underpricing or overpricing of each product?)

Using the traditional allocation method, which product, if any, would BLP, Inc. possibly have considered dropping?

Using the departmental allocation method, which product, if any, would BLP, Inc. possibly have considered dropping?

xUsing the ABC allocation method, which product, if any, would BLP, Inc. possibly have considered dropping? Should it drop that product? Indicate the financial impact of that decision i.e., any additional costs or cost savings). What will net operating income be without that product if you suggest dropping one?

After performing these calculations, you decide to use 2022 monthly data to try and separate manufacturing overhead in the Molding Department into fixed and variable components by applying the high low method. The 2022 data is shown here:

Year	Machine Hours in the Molding Department	Molding Department Total Manufacturing Overhead
January	1,500	$59,750
February	1,980	$66,100
March	1,875	$66,815
April	2,045	$71,550
May	3,625	$82,060
June	1,420	$62,175
July	2,015	$69,800
August	1,540	$64,350
September	1,020	$55,725
October	1,250	$60,400
November	2,590	$77,275
December	1,140	$51,500

What is the variable manufacturing overhead cost estimated to be in the Molding Department? (rounded to the nearest cent i.e., $XX.XX)
What is the fixed manufacturing overhead cost estimated to be in the Molding Department? (rounded to the nearest whole dollar)
If 1,675, 2,000, and 2,300 machine hours are estimated to be used in January, February, and March 2023, respectively, in the Molding Department, what is the expected Molding Department Manufacturing Overhead Cost for that month? Show the variable, fixed, and total amount.
If Molding department depreciation is expected to be $12,500 of fixed manufacturing overhead cost each month, prepare a partial manufacturing overhead budget only for the Molding department for the first quarter of 2023 making sure to also show the related cash disbursements.

Assume BLP uses departmental allocation rates. One of BLPs customers would like to place a special order for tents that are a hybrid between the Standard and Deluxe models. The hybrid will have the same direct material requirements as the Deluxe tent and the same direct labor requirements per unit and molding MH requirements of the Standard tent. Assuming that the company has enough capacity to satisfy the special order along with current regular business, what is the minimum price that BLP should accept per unit for the special order? Use your calculations from #21 to help you with this. Other than the portion of Molding overhead that is variable, assume all other Molding and Assembly and Packaging manufacturing overhead is considered fixed. Also assume that other than a $10 per unit commission associated with the special order, all other selling and administrative expenses are fixed.