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College Supply Company (CSC) makes three types of drinking glasses: short, medium, and tall. It presently applies overhead using a predetermined rate based on direct labor-hours. A group of company employees recommended that CSC switch to activity-based costing and identified the following activities, cost drivers, estimated costs, and estimated cost driver units for Year 5 for each activity center. Activity Setting up production Processing orders Handling materials Using machines Providing quality management Packing and shipping Number of units produced Direct materials costs Direct labor-hours Number of orders Number of production runs. Pounds of material In addition, management estimated 2,000 direct labor-hours for year 5. Assume that the following cost driver volumes occurred in February, year 5. Machine-hours. Number of inspections Units shipped Recommended Cost Driver Number of production runs Number of orders Pounds of materials. Direct labor costs were $18 per hour. Machine-hours Number of inspections Units shipped Short 900 $5,000 110 7 2 400 500 2 900 Medium 400 $2,000 110 7 4 900 300 2 400 Tall 400 $2,500 110 3 7 Estimated Cost $ 30,000 52,000 100 200 2 300 14,000 54,000 56,000 38,000 $244,000 Estimated Cost Driver Units 100 runs 200 orders 7,000 pounds 9,000 hours 40 inspections 19,000 units

Required: a. Compute a predetermined overhead rate for year 5 for each cost driver recommended by the employees. Also compute a predetermined rate using direct labor-hours as the allocation base. b. Compute the production costs for each product for February using direct labor-hours as the allocation base and the predetermined rate computed in requirement a. c. Compute the production costs for each product for February using the cost drivers recommended by the employees and the predetermined rates computed in requirement a. (Note: Do not assume that total overhead applied to products in February will be the same for activity-based costing as it was for the labor-hour-based allocation.) Complete this question by entering your answers in the tabs below. Required A Required B Compute a predetermined overhead rate for year 5 for each cost driver recommended by the employees. Also compute a predetermined rate using direct labor-hours as the allocation base. (Round your answers to 2 decimal places.) Activity Setting up production Processing orders Handling materials Using machines Required C Performing quality management Packing & shipping Direct labor hour rate. Allocation Rate per run per order per lb per hour per insp. per unit per hour < Required A Required B >

Required: a. Compute a predetermined overhead rate for year 5 for each cost driver recommended by the employees. Also compute a predetermined rate using direct labor-hours as the allocation base. b. Compute the production costs for each product for February using direct labor-hours as the allocation base and the predetermined rate computed in requirement a. c. Compute the production costs for each product for February using the cost drivers recommended by the employees and the predetermined rates computed in requirement a. (Note: Do not assume that total overhead applied to products in February will be the same for activity-based costing as it was for the labor-hour-based allocation.) Complete this question by entering your answers in the tabs below. Required A Required B Required C Compute the production costs for each product for February using direct labor-hours as the allocation base and the predetermined rate computed in requirement a. (Do not round intermediate calculations.) Direct materials Direct labor Overhead Total costs $ Short 5,000 $ Medium 2,000 $ < Required A Tall 2,500 Required C >

c. Compute the production costs for each product for February using the cost drivers recommended by the employees and the predetermined rates computed in requirement a. (Note: Do not assume that total overhead applied to products in February will be the same for activity-based costing as it was for the labor-hour-based allocation.) Complete this question by entering your answers in the tabs below. Required A Required B Required C Compute the production costs for each product for February using the cost drivers recommended by the employees and the predetermined rates computed in requirement a. (Note: Do not assume that total overhead applied products in February will be the same for activity-based costing as it was for the labor-hour-based allocation.) (Do not round intermediate calculations.) Direct materials Direct labor Setting up production Processing orders Handling materials Using machines Performing quality management Shipping Total costs $ Short 5,000 $ Medium < Required B 2,000 $ Tall 2,500 Required C > Show less