This is the case of accounting. Please answer me the solutions with full explanation.

Merry Mint produces a wide variety of coins. Its products range from coins to be used in video game cafs to high quality reproduction coins that are purchased by collectors. Some coins are made of very inexpensive materials, but the higher end coins are made of gold and silver. Some coins are decorated in incredible detail, while others are quite basic. Coins are produced in batches that can consist of a limited number of coins or of tens of thousands of coins. Each batch goes through a series of processes. First, the basic shape is formed. For some materials, this requires that the metal be melted and poured into molds. For others, sheets of the metal are cut into the required shapes. Either way, the process is highly automated and revolves around the use of two very specialized machines. Because the machines both require that extraordinary safety measures be followed, they are housed in a separate section of the building behind soundproofed and fireproofed walls. This area contains 1,000 square metres. Both machines are quite old and are not considered energy efficient. After the coins have been formed, the design is added. In some cases, this is a simple matter of feeding the coins through a stamping machine which leaves the desired picture pressed into the metal. For the more high-end coins, the designs are etched into the metal by hand. The stamping machine is very new and is highly energy efficient. It requires no specialized training to operate and does not represent a safety hazard to anyone. It occupies 500 square metre space very near to the room for the shaping process, since it processes larger batches. This minimizes the cost of moving the work-in-process. Etching takes places in a 1,000 square metre area as far from the machines as possible. The workers who perform this process are artisans and must have adequate space, light and access to hand and electric tools. After the coins are completed, they are polished. The process is a secret one developed by Merry Mint. It requires no chemicals, does not damage the metals or the designs and leaves the coins shiny and the designs clearly defined. It requires only 300 metres of space. The machinery required is powered by solar panels located on the roof. In some months, enough power is generated to operate other machines as well. The process is completely organic and sustainable. The firm has a policy of establishing its overhead rate at the beginning of each year based on direct labor hours. The overhead account is closed at the end of each year. Actual activity levels and costs for 2016 by quarter are in the attached spreadsheet. The management team has identified the following circumstances that might impact the upcoming year (pretend 2017 has not yet started). Marketing believes 2017 will be a better year. They expect unit sales to increase by 15% to 20%. Costs of direct materials are expected to follow the cost of the metals which are the most important direct materials. Nearly 35% of sales are to the customers in the United States. The hydro company has just announced a 2% rate increase. Salaries in the area have increased only at the rate of inflation for the past 10 years. Requirement 1. Develop the overhead rate for Merry Mint for 2017. The deliverable here is the rate, but you must document the process by which you arrive at that result. The firm is considering implementing an ABC system. The proposed system would include the two standard direct costs (DM and DL) and three cost pools: forming, design and polishing. Forming would be driven by machine hours in forming, design by direct labor hours in design and polishing by number of coins. Requirement 2. Develop the rates for the proposed ABC system. Again document your process. (Now you may drop the pretense that 2017 has not yet begun.) On March 1, Buffalo University ordered 2,000 commemorative coins which will be part of the celebration for the completion of the new Goodman School of Business building. The coins are made of silver and feature a picture of the Dean on one side and a dollar sign on the other. The order was entered as Job 409. Direct materials for the job will be $28,000 and direct labor will be $25,000. The job will require 1,120 DLH (410 in forming, 682 in design and 28 in polishing). It will require 35 machine hours (1 in forming, 24 in design and 10 in polishing). Requirement 3. Prepare an estimate of the cost of the Buffalo job. Do this for the current traditional system and for the proposed ABC system. Requirement 4. Evaluate the ABC system. In this process, use the Buffalo job as an example. What changes, if any, would you recommend. Make sure your recommendations are realistic and do not require data collection that might be too expensive or impractical. Q1 Unit Sales Sales in dollars Q2 145,000 $ 4,712,500 164,000 $ 4,319,760 Direct Labor Hours Forming 29,400 25,300 Design 51,200 56,900 2,560 2,510 32 31 1,600 1,520 700 800 967,150 744,560 803,208 595,815 1,171,968 1,145,397 38,400 37,650 Utilities 24,113 24,309 Indirect materials 94,250 86,395 209,880 211,590 Depreciation on forming machine 45,000 45,000 Depreciation on designing machines 22,000 22,000 Depreciation on polishing machines 36,700 36,700 Supervisor salaries 95,000 95,000 Utilities 56,700 56,700 Rent on factory 77,300 77,300 Polishing Machine hours Forming Design Polishing DM DL (in dollars) Forming Design Polishing Variable overhead Repairs and maintenance Fixed overhead Q3 Q4 126,000 124,000 $ 4,364,640 $ 2,700,720 27,100 18,400 48,100 37,200 2,340 1,920 28 21 1,320 1,090 600 610 976,500 510,880 763,136 394,496 1,138,527 719,448 35,100 28,800 20,142 17,795 87,293 54,014 175,320 154,890 45,000 45,000 22,000 22,000 36,700 36,700 95,000 95,000 56,700 56,700 77,300 77,300