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Roadster Company (RC) designs and produces automotive part in 2017, actual variable manufacturing overhead 280.000. RC simple costing som machine hours and prices its contracts based on ful One of its customers has regularly complained of being charged noncomitive prices o resources more closely. He knows that there are three main departments that consume overhead our des production and engineering w i detailed information FT (Click the icon to view the information) Read the regulaments var a ndering ved to the womens b on r Mumew Dre s s es the common of whead th the department person and examion of me dia yad edwing Requirement 1. Compute the manufacturing overhead allowed to each customer in 2017 using the simple costing system that es machine hours the action b Determine the formula de calculate overheading the simple costing method and then a mand ing over for 2017 Round your e hear t 200000 Manufacturing over per machine hour Calculate the overhead allocated to each customer using the simple costing method round your answers to the nearest wodor) Overhead Machine Hours Used o ns : Dept Department Requirement 2. Compute the manufacturing overhead allocated to each customer in 2017 using department based manufacturing overhead rates Alb Determine the formula used to calculate the department-based manufacturing overhead rates Total manufacturing overhead / Total machine hours * Manufacturing overhead rate by depl. RC's 2017 manufacturing overhead rates by department are as follows: RC's 2017 manufacturing overhead rates by department are as follows: Department Design Engineering Manufacturing Overhead Rate (by Department) por machine hour 50 per machine hour 44 per machine hour Production Calculate the overhead allocated to each customer, by department, using the departmental manufacturing overhead rates Calculated in the previous stop. Calculate the total overhead cost for each depe Southern Caesar Juniper Motors Motors Auto Total Department Design Engineering Production Total Requirement 3. Comment on your answers in requirements 1 and 2. Which customer do you think was complaining about being overcharged in the simple system? If the new department-based rates an customer(s) will be unhappy? How would you respond to these concors? Under the simple-costing system, was likely unhappy about their bil, because the contract appears to have been the new department-based rates are used to price contracts If the new department based rates are used to pro contracts their bils will be will be hoy. This is because the under the cooling som er love been ng the department based If the new department based used, RC should explain to the unhappy customers how the ca tion was done and point out their of Requirement 4. How might use the information available from its department by department analysis of manufacturing overheado? Select th Other than for pricing, RC can also use the information from the department based system ely D A B to provide incentives to professionals to set targets over time to reduce both the consumption of each indirect resource and the loroevaluate employee pay scales to examine and streamline its own operations so that there is mum value-added from cost of the sources c O Indirect U S Requirements. RC's managers are wondering if they should further refine the department by department conting s worthwhile to further refine the department conting system into an ABC system? om inte an ABC system by identifying different activities within each department Under what conditions would not be O A s ignificant costs are incurred on different activities within a department, but each activity has the same cost driver OB. a single activity accounts for a cable proportion of the department's costs OC. If there wasnt much variation among contracts in the consumption of activities within a department OD. Al of the above 0 Data Table D plain to ailable the d Department Design Engineering Production Total tion of Usage of Cost Drivers by Customer Contract Manufacturing Southern Caesar Juniper Overhead in 2017 Motors Motors Auto $ 35,000 150 250 100 25,000130100 220,000 300 $ 280,000 Cost Driver CAD-design-hours Engineering-hours Machine-hours 270 1.000 3,700 SO it ther ld furt nto ar Print Done within of the department's costs. consumption of activities within a department Roadster Company (RC) designs and produces automotive parts. In 2017, actual variable manufacturing overhead is 280.000. RC's simples costing system doces var mand ing overhead to Free customers based on machine hours and price is contract based on costs. One of its customers has regularly complained of being charged competitive presso RC controler Mathew Draper roles that is time to examine the consumption of overhead resources more closely. He knows that there are three main departments that come overhead source design, production, and engineering. Interviews with the department personnel and examination of time records yield the following detailed information Click the icon to view the information) Read the m oments Requirement 1. Compute the manufacturing overhead allocated to each customer in 2017 using the simple costing system that uses machine hours on the location base Determine the formula nooded to calculate overhead using the simple costing method and the calculate RC's manufacturing overhead rate for 2017. (Pound your answer to the nearest cont) Total manufacturing overhead Total machine hours Manufacturing overhead 280000 5000 por machine hour Calculate the overhead allocated to each customer using the simple costing method (Round your answers to the rest whole dollar) Machine Overhead Customer Hours Used Allocated Southern Motors 300 16800 Caesar Motors 3700 207200 Juniper Auto 1000 56000 Requirement 2. Compute the manufacturing overhead allocated to each customer in 2017 using department-based manufacturing overhead rates (Abbreviations used Dept Determine the formula used to calculate the department-based manufacturing overheads det Total manufacturing overhead Mandring over Total machine hours Department) RC's 2017 manufacturing overhead rates by department are as follows: Manufacturing Overhead Rate Department (by Department) Design 70 per machine hour Engineering 50 per machine hour Production 44 per machine hour Calculate the overhead allocated to each customer, by department, using the departmental manufacturing overhead rates Calculated in the previous step. Calculate the total overhead cost for et department and each customer. Southern Motors Caesar Motors Juniper Auto Total Department Design Engineering Production Total Requirement 3. Comment on your answers in requirements 1 and 2. Which customer do you think was complaining about being overcharged in the simple system? If the new department-based rates are used to price contract, which customer will be unhappy? How would you respond to these concerns? Under the simple-costing system, was likely unhappy about their bill, because the contract appears to have been in the new department-based rates are used to price contrada I will likely be happier about their bill. If the new department-based rates are used to price contracts, Using the department-based rates, their bills will be will likely be unhappy. This is because their bills under the simple-cooling system appear to have been If the new department-based rates are used, RC should explain to the unhappy custom We calculation was done, and point out their high use of relative to Requirement 4. How else might RC use the information available from its department by department analysis of manufacturing overhead costs? (Select all that apply) Other than for pricing, RC can also use the information from the department based system A to provide incentives to professional staff B. to set targets over time to reduce both the consumption of each indirect resource and the unit costs of the resources C. to reevaluate employee pay scales. D. to examine and streamline its own operations so that there is maximum value d from all direct resources Requirement S. RC's managers are wondering if they should further refine the department by onpartment oosting systern into an ABC system by identifying different activities within each department. Under what conditions would not be worthwhile to further refine the department costing systers into an ABC system? O A. if significant costs are incurred on different activities within a department, but each activity has the same cost driver O B. If a single activity accounts for a sizable proportion of the departments costs. o c. If there wasn't much variation among contracts in the consumption of activities within a department OD. All of the above

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