The Messenger Fones Company designs and manufactures cell phones. The company currently offers two models; the T340 and the SS330. The company has three operating departments: design, engineering and production. In the past, the company has been allocating the manufacturing overhead based on machine hours. However, Laura Simmie, the product manager of T340, has a hunch that the current method of using only machine hours as a cost allocation base is resulting in the allocation of too much overhead costs to the product. She has proposed that the company use the ABC system to cost products. In 2019, the actual manufacturing overhead was $262,200. The following indicates the total amount of machine hours used for the production of each cell phone model in 2019. Machine Hours T340 2,400 hours 2,200 hours SS330 Total Machine Hours 4,600 hours Do not enter dollar signs or commas in the input boxes. a) Calculate the manufacturing overhead cost allocation rate using machine hours. Round your answers to 2 decimal places. Manufacturing overhead cost allocation rate: $ b) Determine the manufacturing overhead allocated to each model using the manufacturing overhead cost allocation rate determined in part (a). Round your answers to the nearest whole number. T340: $ SS330: $ c) The Messenger Fones Company is considering changing their costing system by tracing manufacturing overhead costs to the three operating activities. The following is the amount of manufacturing overhead costs traceable to the designing, engineering and production activities. Operating Areas Cost Drivers Total Costs Designing Number of design hours $112,200 Engineering Number of engineering hours $42,940 Production Number of machine hours $120,060 Total $275,200 The total cost allocation units used for each product line are: Cost Allocation Base T340 SS330 Total Design hours Engineering hours 1,500 1,900 3,400 1,400 2,400 3,800 2,400 2,200 4,600 Machine hours Determine the manufacturing overhead rate for each activity. In addition, use the manufacturing overhead rates to calculate the allocated overhead for each model. Round your answers to 2 decimal places. Manufacturing overhead rates Designing $ Engineering $ Production $ Round your answers to the nearest whole number. Manufacturing Overhead T340 $ SS330 $ Determine the manufacturing overhead rate for each activity. In addition, use the manufacturing overhead rates to calculate the allocated overhead for each model. Round your answers to 2 decimal places. Manufacturing overhead rates Designing $ Engineering $ Production $ Round your answers to the nearest whole number. Manufacturing Overhead T340 $ SS330 $ d) Was Laura Simmie's hunch about the allocation of too much overhead costs to her product right? Round your answers to the nearest whole number. Under-allocation / Over-allocation: $
