Trousers Question 1: (100 points) Makenzie Company produces two product lines: free size Shirts and Trousers. Data related to the two products are presented here: Shirts Annual production in units 86,000 43,000 Direct material costs $344,000 $172,000 Direct manufacturing labor costs $103,200 $51,600 Direct manufacturing labor-hours 7,000 4,000 Machine-hours 57,000 28,000 Number of production runs 42 42 Inspection hours 540 1,100 Total manufacturing overhead costs and their cost drivers are as follows: Activity Machining costs Setup costs Activity cost Cost driver $620,500 machine hours 126,000 production runs 118,080 Inspection hours Inspection costs Required: (note: use the provided tables below to complete number (1)) 1. A. Calculate manufacturing overhead rate for each activity cost pool using the above given cost driver. (40 points) B. Calculate the total manufacturing overhead costs allocated for each product. (40 points) C. Compute the manufacturing overhead cost per unit for each product. (15 points) 2 Explain how might Makenzie Company managers use the new cost information from its activity-based costing system to better manage its business. (5 points) 1. A. Calculate manufacturing overhead rate for each activity cost pool using the above given cost driver Activity Cost driver Rate Activity cost $ Activity Cost / Driver Machining costs machine hours Setup costs production runs Inspection costs Inspection hours 1. B. Compute the manufacturing overhead cost per unit for each product. Shirts Trousers Machining costs Setup costs Inspection costs Total manufacturing overhead costs Divide by number of units Manufacturing overhead cost per unit 1. C. Compute the manufacturing cost per unit for each product. Shirts ($) Trousers ($) Manufacturing cost per unit: Direct materials Direct manufacturing labor Manufacturing overhead (from part B) Manufacturing cost per unit 2. Explain how might Makenzie Company managers use the new cost information from its activity-based costing system to better manage its business