90.2K

Verified Solution

Link Copied!

Soal 1(40%) PT ABC manufactures two types of cabinets - the Premium and the Super - and applies manufacturing overhead to all units at the rate based on machine hour. Production information a follows: The firm's calculation of manufacturing overhead costs follows: oun The controller, who is studying the use of activity-based costing, has determined that the firm's overhead can be identified with three activities: manufacturing setups, machine processing, and product shipping. Other information includes: - Manufacturing setups in done per batch. One batch of Premium is 160 units, while one batcl Super is 1,000 units. - The cost driver for machine processing is machine hour. Each Premium cabinet needs 2 hou machine hour, while each Super cabinet needs 40 minutes of machine hour. - There are 300 outgoing shipments for Premium cabinet and 200 for Super cabinet. At the request of PT ABC's VP of marketing, the cost management staff has recently completed customer-profitability study. The following activity-based costing information was the basis for Cost driver data for two of PT ABC biggest customers for the year 2020, Customer X and Customer Y. are: The following additional information has been compiled by PT ABC for Customer X and Customer Y, for the year 2020 Required: a. Compute manufacturing overhead rate using the company's current overhead costing (1\%) b. Compute unit manufacturing cost of Premium \& Super using the company's current overhead costing procedures (3.5%) c. Compute unit manufacturing cost of Premium \& Super using ABC (6.5\%) d. Is the Cost of Premium overstated or understated (i.e. distorted) by the use of machine hours to allocate total manufacturing OH to production? (1\%). By How much? (1\%) e. Calculate the aggregate amount by which the Premium line is understated/overstated by the company's current traditional OH costing procedures. (1.5%). Then calculate the aggregate amount by which the traditional system undercosts/overcosts the Super line (1.5\%) f. Is there any difference in the total manufacturing overhead cost between traditional costing \& ABC costing? (3\%) g. Calculate customer related costs for each of PT ABC's biggest customers (5%) h. Calculate operating income after taking into account your result from point g above (3%) i. Comment on the result from points g&h above, which customer is lessot profitable and why (3%) j. What recommendation would you like to give to PT ABC related to the result of your answer from points g,h,& i above? (3\%) k. When analyzing the high number of sales visits to Customer Y, the company's controller found out that the Sales Rep for Customer Y is actually receiving some personal favor from Customer Y that resulted in him giving more discount to Customer Y. the Marketing Manager was aware of this but did not report it to his superior. Analyse this situation from the point of view of the code of ethics (3.5%). Provide recommendation for this matter, for the company and for the related staffs involved (3.5%)

Answer & Explanation Solved by verified expert

See Answer