t ences Whitestone Company produces two subassemblies, JR-14 and RM-13, used in manufacturing trucks. The company is currently using an absorption costing system that applies overhead based on direct-labor hours. The budget for the current year ending December 31, 20x1, is as follows: WHITESTONE COMPANY Sales in units Sales revenue Budgeted Statement of Gross Margin for 20x1 Cost of goods manufactured and soldi Beginning finished-goods inventory Add: Direct material Direct labor Applied manufacturing overhead Cost of goods available for sale Less: Ending finished-goods inventory Cost of goods sold Gross margin JR-14 5,000 $1,700,000 RM-13 Total 5,000 $2,200,000 10,000, $3,900,000 $ 540,000 $ 240,000 $ 300,000 1,000,000 185,185 544,025 $1,969,210 1,750,000 92,593 272,013 2,750,000 277,778 816,038 $2,414,606 $4,383,816 240,000 $1,729,210 300,000 $2,114,606 540,000 $3,843,816 5 (29,210) $ 85,394 $ 56,184 "Total manufacturing overhead (applied on the basis of direct-labor hours): Machining $424,528 Assembly 216,981 Material handling 56,604 Inspection 117,925 Total $816,038 Total manufacturing overhead (applied on the basis of direct-labor hours): Machining Assembly $424,528 216,981 Material handling Inspection Total 56,604 117,925 $816,038 Mark Ward, Whitestone's president, has been reading about a product-costing method called activity-based costing. Ward is convint that activity-based costing will cast a new light on future profits. As a result, Brian Walters, Whitestone's director of cost managemen has accumulated cost pool information for this year shown on the following chart. This information is based on a product mix of 5,00 units of JR-14 and 5,000 units of RM-13. Cost Pool Information for 20x1 Cost Pool Direct labor Activity Direct-labor hours Machining Machine hours Assembly Assembly hours Material handling Number of parts, Inspection Inspection hours JR-14 RM-13 10,000 15,000 5,000 30,000 6,000 5,500 5 10 5,000 7,500 In addition, the following information is projected for the next calendar year, 20x2 Beginning inventory, finished goods (in unita) JR-14 RM-131 800 600. that activity-based costing will cast a new light on future profits. As a result, Brian Walters, Whitestone's director of cost management, has accumulated cost pool information for this year shown on the following chart. This information is based on a product mix of 5,000 units of JR-14 and 5,000 units of RM-13. Direct labor Cost Pool Information for 20x1 Activity Direct-labor hours Cost Pool JR-14 RM-13 10,000 5,000 Machining Machine hours 15,000 30,000 Assembly Assembly hours 6,000 5,500 Material handling Number of parts 5 10 Inspection Inspection hours 5,000 7,500 In addition, the following information is projected for the next calendar year, 20x2. Beginning inventory, finished goods (in units) Ending inventory, finished goods (in units) JR-14 800 RM-13) 600 700 Sales (in units) 5,100 700 4,900 On January 1, 20x2, Whitestone is planning to increase the prices of JR-14 to $355 and RM-13 to $455. Material costs are not expected to increase in 20x2, but direct labor will increase by 8 percent, and all manufacturing overhead costs will increase by 6 percent. Due to the nature of the manufacturing process, the company does not have any beginning or ending work-in-process inventories. Whitestone uses a just-in-time inventory system and has materials delivered to the production facility directly from the vendors. The raw-material inventory at both the beginning and the end of the month is immaterial and can be ignored for the purposes of a budgeted income statement. The company uses the first-in, first-out (FIFO) inventory method. Required: 2. Using activity-based costing, calculate the total cost in 20x2 for the following activity cost pools: machining, assembly, material handling, and inspection. Then, calculate the pool rate per unit of the appropriate cost driver for each of the four activities. 3. Prepare a table showing for each product line the estimated 20x2 cost for each of the following cost elements: direct material, direct labor machining, assembly. material handling and inspection Saved Beginning inventory, finished goods (in units) Ending inventory, finished goods (in units) Sales (in units) 800 600 700 5,100 700 4,900 Hei ces On January 1, 20x2, Whitestone is planning to increase the prices of JR-14 to $355 and RM-13 to $455. Material costs are not expected to increase in 20x2, but direct labor will increase by 8 percent, and all manufacturing overhead costs will increase by 6 percent. Due to the nature of the manufacturing process, the company does not have any beginning or ending work-in-process inventories. Whitestone uses a just-in-time inventory system and has materials delivered to the production facility directly from the vendors. The raw-material inventory at both the beginning and the end of the month is immaterial and can be ignored for the purposes of a budgeted income statement. The company uses the first-in, first-out (FIFO) inventory method. Required: 2. Using activity-based costing, calculate the total cost in 20x2 for the following activity cost pools: machining, assembly, material, handling, and inspection. Then, calculate the pool rate per unit of the appropriate cost driver for each of the four activities. 3. Prepare a table showing for each product line the estimated 20x2 cost for each of the following cost elements: direct material, direct labor, machining, assembly, material handling, and inspection. 4. Prepare a budgeted statement showing the gross margin for Whitestone Company for 20x2, using activity-based costing. Complete this question by entering your answers in the tabs below. Required 2 Required 3 Required 4 Prepare a table showing for each product line the estimated 20x2 cost for each of the following cost elements: direct material, direct labor, machining, assembly, material handling, and inspection. (Round pool rates to 2 decimal places and other intermediate values to the nearest whole dollar) JR-14 RM-13 Complete this question by entering your answers in the tabs below. Required 2 Required 3 Required 4 Prepare a table showing for each product line the estimated 20x2 cost for each of the following cost elements: direct mate direct labor, machining, assembly, material handling, and inspection. (Round pool rates to 2 decimal places and other Intermediate values to the nearest whole dollar.) RM-13 Estimated 20x2 JR-14 Estimated 20x2 Product Cost Product Cost Direct material 1,000 Direct labor 200 Machining Assembly Material handling Inspection Total cost 1,200 $ < Required 2 0 Required 4 >