Strictly Clean Inc. manufactures household industrial washing machines sold at trade shows.The company’s two leading product lines, Aspire and Steamer, are manufactured on a commonassembly line. Although different materials are used, and the machinery is re-tooled for eachproduct, the direct labourers are the same for each product line.Recently the production manager concluded the plantwide rate for allocating manufacturingoverhead on the basis of machine hours to its products is no longer acceptable. He has heardabout activity-based costing and has assembled some information for use in changing the costsystem to a cost driver concept.Per unit data is as follows:RequiredA) Using the traditional costing system, compute the single plantwide overhead rate for theyear.Solution:Plantwide rate = $8,935,808 / (25,500 + 21,300) = $190.94 (rounded)Activity Cost DriverManufacturingOverhead Aspire SteamerMaterial handling Number of parts $1,734,525 35,700 53,250Machining Machine hours $4,481,100 25,500 21,300Assembly Units began $2,586,938 5,100 10,650Inspection Number tested $133,245 1,020 2,130Total manufacturing overhead costs $8,935,808Aspire SteamerExpected production 5,100 10,650Selling price $1,418 $1,586Direct material cost $445 $534Direct labour cost $130 $163

he following information is available for Dakota Company: Product 1Product 2Sales$1,400,000$1,800,000Direct materials(200,000)(400,000)Direct labor(600,000)(600,000)Manufacturing overhead*   (500,000)   (500,000)Gross margin$   100,000$   300,000*allocated based on direct labor hoursDakota Company has decided to allocate its manufacturing overhead cost using activity-based costing. Manufacturing overhead will be allocated based on batch-level and product line manufacturing as follows: Total   Manufacturing   Overhead CostsProduct 1Product 2Batch-level manufacturing overhead$600,00020 batches60 batchesProduct line manufacturing overhead$400,00010 lines   40 lines    What is Dakota Company's gross margin for Product 1 using activity based costing?

Activity Cost DriverManufacturingOverhead Aspire Steamer RateMaterial handling Number of parts $1,734,525 35,700 53,250 19.50Machining Machine hours $4,481,100 25,500 21,300 95.75Assembly Units began $2,586,938 5,100 10,650 164.25Inspection Number tested $133,245 1,020 2,130 42.30Aspire SteamerSelling price $1,418 $1,586Direct material cost 445.00 534.00Direct labour cost 130.00 162.50Allocated costsMaterial handling 136.50 97.50Machining 478.75 191.50Assembly 164.25 164.25Inspection 8.46 8.46Total costs 1362.96 1158.21Total profit 55.04$ 427.79$

Delph Company uses job-order costing with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that 50,000 machine-hours would be required for the period’s estimated level of production. It also estimated $910,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $1.80 per machine-hour.Because Delph has two manufacturing departments—Molding and Fabrication—it is considering replacing its plantwide overhead rate with departmental rates that would also be based on machine-hours. The company gathered the following information to enable calculating departmental overhead rates:  Molding Fabrication TotalMachine-hours 20,000 30,000 50,000Fixed manufacturing overhead cost $ 700,000 $ 210,000 $ 910,000Variable manufacturing overhead cost per machine-hour $ 3.00 $ 1.00  During the year, the company had no beginning or ending inventories and it started, completed, and sold only two jobs—Job D-70 and Job C-200. It provided the following information related to those two jobs:Job D-70 Molding Fabrication TotalDirect materials cost $ 375,000 $ 325,000 $ 700,000Direct labor cost $ 200,000 $ 160,000 $ 360,000Machine-hours 14,000 6,000 20,000Job C-200 Molding Fabrication TotalDirect materials cost $ 300,000 $ 250,000 $ 550,000Direct labor cost $ 175,000 $ 225,000 $ 400,000Machine-hours 6,000 24,000 30,000Delph had no underapplied or overapplied manufacturing overhead during the year.Exercise 2-17 (Static) Part 2Required:2. Assume Delph uses departmental predetermined overhead rates based on machine-hours.Compute the departmental predetermined overhead rates.Compute the total manufacturing cost assigned to Job D-70 and Job C-200.If Delph establishes bid prices that are 150% of total manufacturing cost, what bid prices would it have established for Job D-70 and Job C-200?What is Delph’s cost of goods sold for the year?

In an actual job-order costing system, factory overhead is assigned to a job continuously during the production process.Group of answer choicesTrueFalse

B) Using the traditional costing and the rate computed in (A), determine:a. the total cost to produce one unit of each product line, andb. the profitability per unit of each product line.Solution:Aspire SteamerDirect materials $445.00 $534.00Direct labour $130.00 $163.00Overhead $190.94 x (25,500/5,100); (21,300/10,650) $954.70 $381.88Total cost per unit $1,529.70 $1,078.88Selling price $1,418.00 $1,586.00Less: costs 1,529.70 1,078.88Profit (loss) per unit -$111.70 $507.12