1 Part 2 2 XYZ company manufactures chemicals used in radiological imaging systems. The company had originally used mach

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1 Part 2 2 Xyz Company Manufactures Chemicals Used In Radiological Imaging Systems The Company Had Originally Used Mach 1 (83.95 KiB) Viewed 27 times

1 Part 2 2 XYZ company manufactures chemicals used in radiological imaging systems. The company had originally used machine hours as the cost driver to develop one predetermined overhead rat 3 You have been recently hired by this company to review the costing of chemicals and realize that maybe a predetermined overhead rate does not give an accurate cost picture. 4 You remember discussing overhead cost issues in MBA641 and want to implement ABC, so you have done some research and come up with the following activity cost pools and cost drivers 5 Budgeted Budgeted Overhead Level Activity 6 Activity cost Pool Cost Cost driver for cost Driver Pool Rate 7 Material handling 14,000 Weight of raw materials in pounds 50,000 $0.28 8 Quality Assurance 10,000 Number of quality checks 5,000 Hazardous waste Weight of hazardous chemical 9 control 20,000 used in pounds 4,000 10 Other overhead costs 130,000 Machine hours 50,000 11 Total Budgeted overhead cost $174,000 12 13 Required: Make sure you show your work or use cell references for all calculations. You will not earn credit if you just type in your answer. 14 1. Using the information above calculate the single predetermined overhead rate this company is using based on machine hours as the cost driver. 15 Predetermined overhead rate: 16 17 2. If the company uses the ABC approach, what would be the pool rates for the activities you have identified above. 18 I have computed the first activity pool rate above in column E and you should compute the remainder of the rates for the other 3 activities. 19 20 3. An order for a special chemical mix has the following production requirements: 21 22 Material handling 2000 Weight of raw materials in pounds 23 Quality Assurance 10 Number of quality checks 24 Hazardous waste control 100 Weight of hazardous chemicalused in pounds 25 Other overhead costs 1000 Machine hours 26 27 If the company is using the predetermined overhead rate based on machine hours, what is the overhead cost for this order? Total Overhead cost of this order using a 28 predetermined overhead rate 29 30 If the company is using the ABC method, what is the overhead cost for this order? 31 Material handling 32 Quality Assurance 33 control 34 Other overhead costs 35 Total Overhead cost of this order using ABC
37 4. Write a short report (at least 75 words) that identifies factors that explain why the two product-costing systems result in differing costs. 38 Which system do you recommend? Why? 39 You need to include a reference other than the textbook that supports your recommendation. Make sure you include the reference in APA style. 40 41 42 43 44 45 46 47 48 49