Sunrise Ltd produces and sells its standard kitchen cupboards to its customers using a process costing system. The cupboards are processed through two production departments: assembly and testing. The process costing system has single direct cost category (direct materials) and single conversion costs [labour and overhead costs]. Direct materials are added at the beginning of the process, and the conversion costs are added evenly during the process. The management of Sunrise Ltd is looking at the use of weighted average or first-in-first-out method of process costing. At this stage the management team wants to focus on the assembly department and, therefore, require you to prepare a Process cost report (in a tabular form) for October, of the Assembly department using a) Weighted average method (15%), b) FIFO method (15%) and c) give briefcomments on which method is better than another (5%). Data for the assembly department for October are as follows: Physical units Directmaterials Converstion costs Work in process, beginning [Conversion 45%] 4,000 5 1,248,000 S 141,650 Started this month 22,500 Completed and transferred to testing dept 26000 Work in process, ending (Comrersion 65%) 500 Costs added this period 8 4,635,000 5 2,575,000 Since the company has two operating units: Job-Order unit and Mass-Production unit, the management realised that there are two supporting units that significantly provide services to those operating units, they are Human Resources (HR) and Information Technology (IT). In preparing the budget for the year, the management decides to allocate the cost of support units to its operating units based on the service given, using last year's data. This cost will consider as manufacturing overhead cost of the operating units. The cost of HR is allocated based on the salaries of the staff that provide services to other units. The cost of IT is allocated based on number of IT service hours. The Budgeted cost for the year and the support work given last year is presented below. Support units Operating units Total HR IT Job-Order Mass-Prod Budgeted Cast in 5 432,500 250,000 1,300,000 1,040,000 3,322,500 W H R Sela rie n 5 88 000 55,000 77,000 220,000 iorma on Technology (hours) 600 2,200 200 The management team considers two allocation methods to decide the best method for the company. Therefore, you are required to preparethe cost allocation schedule [use a tabular format] from support units to operating units using d) step-down method (10%) beginning with the support unit that provided most service to other support unit, e) reciprocal method {10%) using the simultaneous equation and give brief comments on which method is better than another (5%). In its mass-production operation, Sunshine Ltd had expand its manufacturing operation two years ago to produce two types of kitchen-cupboards: standard and exclusive. The company is currently using simple costing systems that have two direct costs categories (material and labour) and one indirect cost pool. The simple costing systems use total budgeted direct labour hours of 8,850 to allocate its indirect costs. Due to the increase of the competition in the market, the management is considering changing its costing systems from simple to ABC costing. Last years detailed information is as follows: Standard Exclusive Units produced and sold 3,200 1,800 Selling price $125 3200 Direct materials costs per unit 530 545 Direct manufacturinglabour cost per hour $20 $20 Direct manufacturinglabour hours per unit 1.5 hours 2.25 hours Direct manufacturinglabour cost per unit $30 $45 After analysing its indirect costs pools, the company found five activities that generate the indirect costs: Production scheduling, Materials handling, Machine set-up, Assembly, and Inspection. The company has completed research on its indirect cost activities and provides the following: Activity Activity cost Cost driver Activity Usage Standard Exclusive Total Production scheduling $95,000 production runs 25 75 100 Materials handling $42,000 Material moves 75 125 100 m Assembly $50,000 Machine hours 1,500 3,500 5,000 Inspectlon $23,100 Number of Inspedians 120 180 300 Total $230,100 The management team wants you to provide information (show your calculation) on the following: g), product cost per unit of each type using the simple costing system (15%), h} the product cost per unit of each type using the Activity Based system (15%}, and l) brief comments on which method is better than another and explain briey how the company might use this information to address the declining market (1096)