Windsor Company \begin{tabular}{lrr} Milling department manufacturing overhead & $ & 450,000 \\ Finishing department manufacturing overhead & $ & 150,000 \\ Machine hours used: & \\ Milling department & 15,000 \\ Finishing department & 5,000 \\ Labor hours used: & \\ Milling department & 2,000 \\ Finishing department & 2,000 \end{tabular} Manufacturing overhead: \begin{tabular}{|c|c|c|} \hline Setup ( 2,500 setup hours) & $ & 125,000 \\ \hline Production scheduling (150 batches) & & 75,000 \\ \hline Production engineering ( 20,000 machine hours) & & 265,000 \\ \hline Supervision (4,000 direct labor hours) & & 85,800 \\ \hline Machine maintenance ( 1,025 repair requests) & & 49,200 \\ \hline Total activity costs & $ & 600,000 \\ \hline \end{tabular} Data for Job 845 Direct materials costs Direct labor cost (5 Milling direct labor hours; 15 Finishing direct labor hours) $500 Setup hours Production scheduling (number of batches) Machine hours used (15 in Milling and 5 in Finishing) 2 Machine maintenance repair requests 20 Analyzing Product Costs Using Different Overhead Application Methods Analyze the results of E6-24(E18-24) by completing the following analyses in Excel. Data from E6-24(E18-24) is included in the file attached here. Required a. Create pie charts of the product costs of Job 845 for each part b (ABC costing), part c (departmental overhead allocation), and part d (plantwide overhead allocation) of E6-24(E18-24). In each pie chart, include total direct materials, total direct labor, and total overhead costs. Display proportions in percentages. Hint: Right-click inside the pie and select Format Data Labels. Select Percentages under Label Options in the sidebar. Deselect Value, if necessary. Note: Round your answers to the nearest whole percentage. b. 1. Describe the differences in the charts in part a. Using the activity-based costing rates, Using the departmental rates, Using the plantwide rate, appears to be the largest component of product costs and appears to be the largest component of product costs and appears to be the largest component of product costs and the smallest. the smallest. the smallest. 2. How might the charts impact a manager's assessment of product costs under the different methods? Indicate whether each of the following statements is true or false based on a review of your pie charts. When using the plantwide allocation rate, managers may underestimate the significance of overhead costs. When using the ABC allocation rate, managers may overestimate the labor component of product costs. When using the departmental allocation rate, managers may underestimate the significance of overhead costs. When using the ABC allocation rate, managers may underestimate the significance of overhead costs. When using the plantwide allocation rate, managers may overestimate the significance of labor costs. c. Create pie charts showing the components of overhead of Job 845 for each part b, c, and d. Display proportions as values. d. Which chart in part c provides a better management tool for decision-making? Why? The costing pie chart is a tool for managing overhead because it shows the of overhead. Managing a lump sum is much because it doesn't provide details of the costs by activity. Knowing that and are the largest components of costs helps managers know where to direct their efforts to improve efficiencies and lower costs. e. Create one bar chart comparing applied overhead in total for each part b, c, and d. f. How do the differences shown in the bar chart affect the costing of the other jobs of the company? There will be cost cross-subsidization under the and costing methods. Some jobs will have than they should have while others will have than they should have. Under all methods, at the end of the year, the amount of applied overhead will be actual overhead in total