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Fenway Electronics produces video games in three market categories: commercial, home, and miniature Fenway has traditionally allocated overhead costs to the three products using the companywide allocation base of direct labor hours. The company recently Implemented an ABC system when it installed computer-controlled assembly stations that rendered the traditional costing system ineffective. In implementing the ABC system, the company identified the following activity cost pools and cost drivers: Category Unit Total Pooled Cost $360,000 Batch 194,400 Types of costs Indirect labor wages, supplies, factory utilities, machine maintenance Materials handling, inventory storage, labor for setups, packaging, labeling and shipping, scheduling Research and development Rent, general utilities, saintenance, facility depreciation, admin. salaries Cost Driver Machine hours Number of production orders Time spent by research department Square footage Product Facility 105,6ee 3ee,eee Additional data for each of the product lines follow: Total Direct materials cost Direct labor cost Number of labor hours Commercial $ 25.00/unit $ 10.00/hour 6,000 Home $ 15.00/unit $ 8.00/hour 12,000 Miniature $ 12.ee/unit $9.00/hour 2,eee 20,000 Additional data for each of the product lines follow: Total Direct materials cost Direct labor cost Number of labor hours Number of machine hours Number of production orders Research and development time Number of units Square footage Commercial $ 25.00/unit $ 10.00/hour 6,000 10,000 200 lex 15,000 20,000 Home $ 15.00/unit $ 8.00/hour 12,000 . 45,000 2 , 20% 45,000 50,000 Miniature $ 12.00/unit $ 9.ee/hour 2 , 25,000 800 70% 14 , , 20,000 80, eee 9, eee 100% 74, eee 100,000 a. Determine the total cost and cost per unit for each product line, assuming that overhead costs are allocated to each product line using direct labor hours as a companywide allocation base. Also determine the combined cost of all three product lines b. Determine the total cost and cost per unit for each product line, assuming that an ABC system is used to allocate overhead costs, Determine the combined cost of all three product lines (For all requirements, round intermediate calculations and "Cost per Unit" to 2 decimal places.) Cost per Unit Total Cost $ 553,500 Type of Product a Commercial Home Miniaturo Combined total b Commercial Home Miniature Combined total $ 553,500 $ Bombay Rug Company makes two types of rugs, seasonal and all-purpose. Both types of rugs are handmade, but the seasonal rugs require significantly more labor because of their decorative designs. The annual number of rugs made and the labor hours required to make each type of rug follow Number of rugs Number of direct labor hours Seasonal 2,480 120,eee All-Purpose 5,680 168,000 Totals 8,800 288,000 Required a. Assume that annual overhead costs total $172,800. Select the appropriate cost driver and determine the amount of overhead to allocate to each type of rug. b. Bombay automates the seasonal rug line, which results in a dramatic decline in labor usage and allows the company to make 2,400 rugs in only 12,000 hours. Bombay continues to make the all-purpose rugs the same way as before. The number of rugs made and the labor hours required to make them after automation follow A11-Purpose Seasonal 2,400 12,000 Number of rugs Number of direct labor hours 5,600 Totals 8,000 180,000 168,000 Overhead costs are expected to increase to $216,000 as a result of the automation Allocate the increased overhead cost to the two types of rugs using direct labor hours as the allocation base Complete this question by entering your answers in the tabs below. Required A Required B Assume that annual overhead costs total $172,800. Select the appropriate cost driver and determine the amount of overhead to allocate to each type of rug. (Do not round intermediate calculations.) Type of Product Allocated Cost Seasonal All purpose The most appropriate cost driver is Required A Required B > Apple Academy is a profit-oriented education business. Apple provides remedial training for high school students who have fallen behind in their classroom studies. It charges its students $750 per course. During the previous year, Apple provided instruction for 1,000 students. The income statement for the company follows: Revenue Cost of instructors Overhead costs Net income $ 750,000 (340,000) (230,000 $ 180,000 The company president, Andria Rossi, indicated in a discussion with the accountant, Sam Trent, that she was extremely pleased with the growth in the area of computer-assisted instruction. She observed that this department served 200 students using only two part- time instructors. In contrast, the classroom-based instructional department required 32 instructors to teach 800 students. Ms. Rossi noted that the per-student cost of instruction was dramatically lower for the computer-assisted department. She based her conclusion on the following information Apple pays its part-time instructors an average of $10,000 per year. The total cost of instruction and the cost per student are computed as follows: Type of Instruction Number of instructors (a) Number of students (6) Total cost (c = a $10,000) Cost per student (c + b) Computer-Assisted 2 200 $ 20,00 100 Classroom 32 Bee $320,000 400 Assuming that overhead costs were distributed equally across the student population, Ms. Rossi concluded that the cost of instructors was the critical variable in the company's capacity to generate profits. Based on her analysis, her strategic plan called for heavily Increased use of computer-assisted instruction Mr. Trent was not so sure that computer-assisted instruction should be stressed. After attending a seminar on activity-based costing (ABC), he believed that the allocation of overhead cost could be more closely traced to the different types of learning activities. To facilitate an activity-based analysis, he developed the following information about the costs associated with computer-assisted versus classroom instructional activities. He identified $160,000 of overhead costs that were directly traceable to computer-assisted activities, including the costs of computer hardware, software, and technical assistance. He believed the remaining $70,000 of overhead costs should be allocated to the two instructional activities based on the number of students enrolled in each program Required a. Based on the preceding Information, determine the total cost and the cost per student to provide courses through computer- assisted Instruction versus classroom instruction Computer Assisted Classroom Type of instruction Total cost Cost per student Horten Sporting Goods Corporation makes two types of racquets, tennis and badminton. The company uses the same facility to make both products even though the processes are quite different. The company has recently converted its cost accounting system to activity-based costing. The following are the cost data that Jane Price, the cost accountant, prepared for the third quarter of 2018 (during which Horten made 70,000 tennis racquets and 30.000 badminton racquets) Direct Cost Tennis Racquet (TR) Badminton Racquet (BR) Direct materials $28 per unit $2e per unit Direct labor 34 per unit 28 per unit Category Unit level Batch level Product level Facility level Total Estimated cost $750, eee 250,000 150,000 650,000 $1,800,000 Cost Driver Number of inspection hours Number of setups Number of TV comercials Number of machine hours Amount of Cost Driver TR: 15,000 hours, BR: 10,000 hours TR: 80 setups; BR: 45 setups TR: 4; BR: 1 TR: 30,000 hours; BR: 35,000 hours Inspectors are paid according to the number of actual hours worked, which is determined by the number of racquets inspected Engineers who set up equipment for both products are paid monthly salaries TV commercial fees are paid at the beginning of the quarter Facility-level cost includes depreciation of all production equipment Required a. Compute the cost per unit for each product. b. If management wants to price badminton racquets 30 percent above cost, what price should the company set? Complete this question by entering your answers in the tabs below. Required A Required B Compute the cost per unit for each product. (Round intermediate calculations and final answers to 2 decimal places.) Type of Product Cost per Unit Tennis Racquet Badminton Racquet Red A Required B > b. If management wants to price badminton racquets 30 percent above cost, what price should the company set? Complete this question by entering your answers in the tabs below. Required a Required B If management wants to price badminton racquets 30 percent above cost, what price should the company set? (Round Intermediate calculations and final answer to 2 decimal places.) Price of badminton racquets Complete this question by entering your answers in the tabs below. Required A Required Required The current market price for products comparable to Model ZM is $200 and for DS is $86. If Bismarck sold all of its products at the market prices, what was its profit or loss for the previous month? (Round intermediate calculations to 2 decimal places Loss amounts should be indicated by a minus sign.) Amount Model ZM Model DS Complete this question by entering your answers in the tabs below. Required A Required B Required A market expert believes that Bismarck can sell as many cameras as it can produce by pricing Model ZM at $196 and Model DS at $84. Bismarck would like to use those estimates as its target prices and have a profit margin of 30 percent of target prices. What is the target cost for each product? (Round your answers to 2 decimal places.) Model ZM Model DS Target cost/ unit

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