Several years after reengineering its production process, Rickett Corp. hired a new controller, Jillian Harper. She developed

Question:

Several years after reengineering its production process, Rickett Corp. hired a new controller, Jillian Harper. She developed an ABC system very similar to the one used by Rickett's chief rival. Part of the reason Harper developed the ABC system was because Rickett's profits had been declining even though the company had shifted its product mix toward the product that had appeared most profitable under the old system. Before adopting the new ABC system, Rickett had used a plantwide overhead rate, based on direct labor hours developed years ago.
For the upcoming year, the company's budgeted ABC manufacturing overhead allocation rates are as follows:

The number of parts is now a feasible allocation base because Rickett recently purchased bar-coding technology. Rickett produces two wheel models: Standard and Deluxe. Budgeted data for the upcoming year are as follows:
Standard Deluxe
Parts per wheel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0. . . . .... 6.0
Setups per 1,000 wheels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.0. . . ...20.0
Finishing direct labor hours per wheel . . . . . . . . . . . . . . . . . . . . . 1.5. . . . . ...3.2
Total direct labor hours per wheel . . . . . . . . . . . . . . . . . . . . . . . . .2.0. . . . . ...3.0
The company's managers expect to produce 1,000 units of each model during the year.
Requirements
1. Compute the total budgeted manufacturing overhead cost for the upcoming year.
2. Compute the manufacturing overhead cost per wheel of each model using ABC.
3. Compute the company's traditional plantwide overhead rate. Use this rate to determine the manufacturing overhead cost per wheel under the traditional system.