The Gifford Manufacturing Company has two producing departments, machining and assembly. Mr. Gifford recently automated the machining department. The installation of a CAM system, together with robotic workstations, drastically reduced the amount of direct labor required. Meanwhile, the assembly department remained labor intensive. The company had always used one firm-wide rate based on direct-labor hours as the cost-allocation base for applying all costs (except direct materials) to the final products. Mr. Gifford was considering two alternatives: (1) continue using direct-labor hours as the only cost-allocation base, but use different rates in machining and assembly, and (2) using machine hours as the cost-allocation base in the machining department while continuing with direct-labor hours in assembly. Budgeted data for 20X0 are as follows: (Click the icon to view the data.) Read the requirements. Requirement 1. Suppose Gifford continued to use one firm-wide rate based on direct-labor hours to apply all manufacturing costs (except direct materials) to the final products. Compute the cost-application rate that would be used. First enter the formula then compute the cost-application rate. (Round the firmwide rate dollar amount to the nearest cent. Abbreviations used: DL hour Direct Labor hour. Mach. hour = Machine hour.) Data table Total cost (except direct materials) S Machine hours Direct-labor hours *Not applicable Firmwide Rate Machining Assembly Total 576,000 $ 480,000 $ 1,056,000 96,000 12,000 48,000 96,000 60,000 Print Done - X Requirements 1. 2. 3. 4. Suppose Gifford continued to use one firm-wide rate based on direct-labor hours to apply all manufacturing costs (except direct materials) to the final products. Compute the cost-application rate that would be used. Suppose Gifford continued to use direct-labor hours as the only cost-allocation base but used different rates in machining and assembly. a. Compute the cost-application rate for machining. b. Compute the cost-application rate for assembly. Suppose Gifford changed the cost accounting system to use machine hours as the cost-allocation base in machining and direct-labor hours in assembly. a. Compute the cost-application rate for machining. b. Compute the cost-application rate for assembly. Three products use the following machine hours and direct-labor hours: Machine Hours in Machining Direct-Labor Hours in Machining Direct-Labor Hours in Assembly Product A 7.0 2.0 13.0 Product B 12.0 Product C 13.0 2.7 2.2 2.5 8.2 a. Compute the manufacturing cost of each product (excluding direct materials) using one firm-wide rate based on direct-labor hours. b. Compute the manufacturing cost of each product (excluding direct materials) using direct-labor hours as the cost-allocation base, but with different cost-allocation rates in machining and assembly. c. Compute the manufacturing cost of each product (excluding direct materials) using a cost-allocation rate based on direct labor hours in assembly and machine hours in machining. d. Compare and explain the results in requirements 4a, 4b, and 4c. Print Done