Table 1: ABC activities, cost drivers, and cost pools Activity 2:333\

Table 1: ABC activities, cost drivers, and cost pools Activity Production Materials Cleansing Inspection Activity cost driver Machine hours Lbs of etching solutions DLH (cleansing) # of inspections Estimated activity usage 600,000 175,050 85,000 3,500 8,750 14,600 Estimated cost 525,150 275,000 122,600 Table 2: Job proposal (resources) Direct materials cost Direct labor cost Direct labor hours (in production) Direct labor hours (in cleansing) Lbs of material Number of setups Types of etching solution Number of inspections Number of machine-hours Required: 1,175 780 6,850 15 6 275 3,570 Write a 1-2 page memo, as the accounting consultant of Roger Chemometrics, LTD, addressed to Ms. Kate Fischer describing your analysis and the recommendation. Make sure you respond to the following items: 1. Using current traditional costing (plantwide) method, estimate the total cost estimate of the proposed job. Ms. Fischer expects to use a total of 125,000 direct labor hours for the upcoming fiscal year. 2. Using current ABC method, estimate the total cost estimate of the proposed job. 3. Explain to Ms. Fischer which cost estimate should be used to develop her bid, and why. 4. Use ABM to address to Ms. Fischer's concern about process inefficiencies driving up costs. Evaluate the ABC method as it currently stands. Explain what specific change(s) you recommend for the ABC implementation, and how that could affect your cost estimates. BUSINESS ACCOUNTING MANAGERIAL ACCOUNTING MBA 620 Answer & Explanation Answered by Yoonyon_lg 1. Total Estimated Cost - Plantwide 2. Total Estimated Cost - ABC Solved by verified expert O 47,531.15 65,877.95 3. ABC method should be used to develop the bid because it represents a more accurate costing than the plantwide costing. Although ABC shows higher cost and is undesirable for the bidder, it will prevent the company in incurring loss. tent from course documents, que Related Questions Upload to Study Related Courses Expert Help Study Resources Materials Cleansing Inspection Total Estimated OH 525,150 275,000 122,600 2,572,750 OH Rate = = 20.58 per direct labor hour Overhead = 1,175 x 2058 = 24,181.50 Step 2: Total Cost - Plantwide Direct Materials Cost Direct Labor Cost Overhead Cost Total Estimated Cost - Plantwide Step 3: Compute for Allocation 8,750 14,600 24,181.50 47,531.15 Production = = 2.75 per machine hour Materials = 525,150/175,050 = 3 per lb of etching solution Cleansing = = 3.24 per DLH Inspection = 122,600/3,500 = 35.03 per inspection Step 4: Total Overhead - ABC Total Overhead step 5: Total cost - ABC Direct Materials Cost Direct Labor Cost Overhead Cost Total Estimated Cost 9,817.50 20,550.00 2,527.20 9,633.25 42,527.95 - ABC 8,750 14,600 42,527.95 65,877.95