The XYZ Manufacturing Company produces two products, S-101 and C-110. You have obtained the following information regarding the annual manufacturing support (i.e., factory overhead) costs associated with the manufacturing process used to produce these two products:

Required

1. Prepare an Excel spreadsheet that provides activity-based costing (ABC) cost-allocation rates based on budgeted activity units as the denominator activity level for the coming year. (a) What is the budgeted manufacturing support (i.e., factory overhead) cost per unit for S-101? (b) What is the budgeted manufacturing support cost per unit for C-110? (Display each answer to 4 decimal places.)

2. Using your spreadsheet, recalculate the ABC cost-allocation rates, this time based on practical capacity as the denominator activity level. (a) What is the budgeted manufacturing support cost per unit for S-101? (b) What is the budgeted manufacturing support cost per unit for C-110? (Display each answer to 4 decimal places.)

3. Compute, for each cost pool, the difference (rounded to nearest whole dollar) between the budgeted cost for the year and the total cost allocated to production. Label each of these differences (variances) as underapplied or overapplied.

4. How do you interpret the variances (differences) identified in requirement 3?

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Budgeted Activities for the Coming Year S-101 2,500 1,200 Practical Activity Measure Budgeted Cost Pools Setup activity Packing and shipplng Inspection Machining Purchase ordering (Cost Driver) $ 250,000 Setup hours 50,000 Number of shlpments Number of batches 750,000 Units produced 40,000 Number of orders Costs Capacity 5,000 2,000 1,000 150,000 C-110 2,350 775 700 40,000 250 100,000 300 50 110 Total $1,120,000