Vplus Inc. makes two styles of statuettes, Classic and Gold, and operates at capacity. Vplus does large custom orders. Vplus budgets to produce 10,000 classic statuettes and 5,000 gold statuettes. Manufacturing takes place in two production departments: forming and assembly. In the forming department, indirect manufacturing costs are accumulated in two cost pools, setup and general overhead. In the assembly department, all indirect manufacturing costs are accumulated in one general overhead cost pool. The classic statuettes are formed in batches of 200 but because of the more intricate detail of the gold statuettes, they are formed in batches of 50.

The controller has asked you to compare plant-wide, department, and activity-based cost allocation.

1.Calculate the budgeted unit cost of classic and gold statuettes based on a single plant-wide overhead rate, if total overhead is allocated based on total direct costs. (Don't forget to include direct material and direct manufacturing labor cost in your unit cost calculation.) (5 marks)

2.Calculate the budgeted unit cost of classic and gold statuettes based on departmental overhead rates, where forming department overhead costs are allocated based on direct manufacturing labor costs of the forming department and assembly department overhead costs are allocated based on total direct manufacturing labor costs of the assembly department. (5 marks)

3.Calculate the budgeted unit cost of classic and gold statuettes if Vplus allocates overhead costs in each department using activity-based costing, where setup costs are allocated based on number of batches and general overhead costs for each department are allocated based on direct manufacturing labor costs of each department. (5 marks)

4.Explain briefly why plant-wide, department, and activity-based costing systems show different costs for the classic and gold statuettes. Which system would you recommend and why? (5 marks)

Forming Department Acclaim Budgeted Information for the Year Ended November 30,2017+ Classic Gold Total+ Direct materials+ $60,0004 $35,00047 $95,000+7 Direct manufacturing labor Overhead 30,000+ 50,00047 20,000+7 costs+ Setup+ -7 General overhead+ 48,00047 -7 -1 32,000+ Assembly Department+ Classic+ Gold+ Total+ Direct materials+ $5,000+ $10,000+ $15,000+ Direct manufacturing labor+ 15,0004 25,000+ 40,000+ Overhead costs General overhead 40,000+