The financial controller of Seats R Us has established indirect cost pools and cost driver for the coming year as follows.

The financial controller of Seats R Us has established indirect cost pools and cost drivers for the coming year as follows. Indirect cost pools Budgeted cost Cost driver Total level of cost driver Machine processing $120 000 Number of set-ups 40 Power 350 000 Machine hours 22 500 Materials handling 85 000 Materials weight 35 000 kg Quality control 145500 Number of units 82 000 units Other indirect costs 184500 Direct labour hours 14560 hours $885 000 The sales team has received an order for 1500 seats and produced them. The order requires the following. Machine set-ups 7 set-ups Machine hours 3250 machine hours Materials 4250 kg Direct labour hours 2750 hours Required (a) Briefly comment on the importance of a costing system to Seats R Us. 4 marks (b) Draw a diagram showing the current costing system framework. 2 marks (c) Calculate the indirect cost rate for each cost pool identified in (b). 5 marks (d) Assign the indirect costs to the cost object identified in (b). 5 marks (e) Suppose that a single indirect cost rate based on machine hours was used to allocate indirect costs. Draw a diagram showing this costing system framework and contrast it with the one in (b) above. Calculate the indirect cost rate. 3 marks (f) What amount of indirect costs was applied to the cost object using the indirect cost rate based on machine hours? 2 marks (g) Briefly comment on any differences in your answers to (d) and (f) above. 4 marks The financial controller of Seats R Us has established indirect cost pools and cost drivers for the coming year as follows. Indirect cost pools Budgeted cost Cost driver Total level of cost driver Machine processing $120 000 Number of set-ups 40 Power 350 000 Machine hours 22 500 Materials handling 85 000 Materials weight 35 000 kg Quality control 145500 Number of units 82 000 units Other indirect costs 184500 Direct labour hours 14560 hours $885 000 The sales team has received an order for 1500 seats and produced them. The order requires the following. Machine set-ups 7 set-ups Machine hours 3250 machine hours Materials 4250 kg Direct labour hours 2750 hours Required (a) Briefly comment on the importance of a costing system to Seats R Us. 4 marks (b) Draw a diagram showing the current costing system framework. 2 marks (c) Calculate the indirect cost rate for each cost pool identified in (b). 5 marks (d) Assign the indirect costs to the cost object identified in (b). 5 marks (e) Suppose that a single indirect cost rate based on machine hours was used to allocate indirect costs. Draw a diagram showing this costing system framework and contrast it with the one in (b) above. Calculate the indirect cost rate. 3 marks (f) What amount of indirect costs was applied to the cost object using the indirect cost rate based on machine hours? 2 marks (g) Briefly comment on any differences in your answers to (d) and (f) above. 4 marks