The company's manufacturing overhead numbers are as follows: Materials Handling ($154,980); driven by number of material orders handled Machine Processing ($598,600); driven by machine hours Packaging ($91,800); driven by packaging hours The company's only two products required the following activity levels during the year: Material Orders Machine Packaging Handled Hours Hours Medium .. 430 21,000 4,100 Large.. 20,000 6,700 200 Medium (42-inch) Plasma TVS: Total direct material cost: $660,000 Total direct labour cost: $224,000 Production volume: 3,500 units Large (63-inch) Plasma TVs: Total direct material cost: $1,310,000 Total direct labour cost: $384,000 Production volume: 4,300 units Owens Inc. manufactures only two products, Medium (42-inch) and Large (63-inch) plasma screen TVs. To generate adequate profit and cover its expenses throughout the value chain, Owens prices its TVs at 300% of manufacturing cost. The company is concerned because the Large model is facing severe pricing competition, whereas the Medium model is the low-price leader in the market. The CEO questions whether the cost numbers generated by the accounting system are correct. He has just learned about ABC and wants to reanalyze this past year's product costs using an ABC system. Information about the company's products this past year follows: E: (Click the icon to view the data.) Currently, the company applies manufacturing overhead on the basis of direct labour hours. The company incurred $845,380 of MOH this year and 24,500 direct labour hours (8,900 direct labour hours making Medium TVs and 15,600 making Large TVs). The ABC team identified three primary production activities that generate MOH costs: B (Click the icon to view the production activities.) Requirements ..... Requirement 1. Use the company's current costing system to find the total cost of producing all Medium TVs and the total cost of producing all Large TVs. What was the average cost of making each unit of each model? Round your answers to the nearest cent. Begin by identifying the formula to compute the current plantwide manufacturing overhead rate, and then compute the rate. (Round your answer to the nearest cent.) Total manufacturing overhead Total direct labour hours Plantwide overhead rate 845380 24500 34.51 Now use this rate to allocate the overhead to each model, and then calculate the average cost of making each unit of each model. (Round cost per unit to the nearest cent.) Manufacturing cost Medium Large Direct materials 1310000 Direct labour 660000 224000 15432600 384000 538356 Manufacturing overhead Total manufacturing cost 1886756 15722600 3500 4300 Number of units produced 4492.2 438.8 Cost per unit Requirement 2. Use ABC to find the total cost of producing all Medium TVs and the total cost of producing all Large TVs. What was the average cost of making each unit of each model? Round your answers to the nearest cent. Begin by identifying the formula to compute the activity cost allocation rates, and then calculate the activity cost allocation rates. (Round your answers to the nearest cent.) Activity overhead Total activity allocation base Activity allocation rate Materials handling 154980 / / mat. orders handled Machine processing 598600 / machine hour Packaging 91800 packaging hour Now use these rates to allocate the overhead to each model, and then calculate the average cost of making each unit of each model. (Round interim answers to the nearest dollar and final answers to the nearest cent.) Choose from any list or enter any number in the input fields and then continue to the next question. Packaging 91800 /packaging hour Now use these rates to allocate the overhead to each model, and then calculate the average cost of making each unit of each model. (Round interim answers to the nearest dollar and final answers to the nearest cent.) Manufacturing Cost Medium Large Direct materials 660000 1310000 384000 Direct labour 224000 Manufacturing overhead Total manufacturing cost Number of units produced Cost per unit Requirement 3. How much cost distortion was occurring between Owens's two products? Calculate the cost distortion in total and on a per unit basis. Could the cost distortion explain the CEO's confusion about pricing competition? Explain. (Round interim and final answers to the nearest cent. Use parentheses or a minus sign for undercosted and negative cost distortion amounts.) Medium Large Cost per unit using current system Cost per unit using ABC Overcosting/(Undercosting) Number of units Total cost distortion Could the cost distortion explain the CEO's confusion about pricing competition? Explain. (Round your answers to the nearest cent.) The Medium units had been and the Large units had been V. Since Owens's sets its sales price at 300% of manufacturing cost, the resulting sales price should have been about $ for the Medium units and about $ for the Large units