Eva Inc. manufactures two products, A3 and B5. The company uses normal costing with a single...

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Eva Inc. manufactures two products, A3 and B5. The company uses normal costing with a single plantwide manufacturing overhead rate based on direct labour hours. Recently, the company's management accountant has suggested that the firm adopt an activity-based costing system and collected the following data for last year: Units produced and sold Direct labour hours used Direct labour cost Number of times handled Number of parts Number of design changes Number of product setups A3 50,000 200,000 $2,000,000 80,000 24,000 4,000 16,000 B5 Activity Cost 100,000 600,000 $9,000,000 40,000 16,000 2,000 12,000 The accountant determined that the company performs four activities and determined the following costs for each one: Activity Handling $6,000,000 Number of parts $4,800,000 $6,600,000 Design changes Setups $5,600,000 Total overhead $23,000,000 Direct materials cost per unit are $240 for the A3 and $280 for the 85. Required (A) Compute the manufacturing overhead rate using the existing costing system (based on direct labour hours). (B) Compute the total manufacturing overhead allocated to each product line using the existing costing system. What is the total manufacturing cost per unit for each product line? (C) Compute the manufacturing overhead rates using activity-based costing. (D) Compute the total manufacturing overhead allocated to each product line using activity- based costing. What is the total manufacturing cost per unit for each product line? (E) Which method produces more accurate estimates of job costs? Why? Discuss. (F) How could the company use this information to better manage its business? Eva Inc. manufactures two products, A3 and B5. The company uses normal costing with a single plantwide manufacturing overhead rate based on direct labour hours. Recently, the company's management accountant has suggested that the firm adopt an activity-based costing system and collected the following data for last year: Units produced and sold Direct labour hours used Direct labour cost Number of times handled Number of parts Number of design changes Number of product setups A3 50,000 200,000 $2,000,000 80,000 24,000 4,000 16,000 B5 Activity Cost 100,000 600,000 $9,000,000 40,000 16,000 2,000 12,000 The accountant determined that the company performs four activities and determined the following costs for each one: Activity Handling $6,000,000 Number of parts $4,800,000 $6,600,000 Design changes Setups $5,600,000 Total overhead $23,000,000 Direct materials cost per unit are $240 for the A3 and $280 for the 85. Required (A) Compute the manufacturing overhead rate using the existing costing system (based on direct labour hours). (B) Compute the total manufacturing overhead allocated to each product line using the existing costing system. What is the total manufacturing cost per unit for each product line? (C) Compute the manufacturing overhead rates using activity-based costing. (D) Compute the total manufacturing overhead allocated to each product line using activity- based costing. What is the total manufacturing cost per unit for each product line? (E) Which method produces more accurate estimates of job costs? Why? Discuss. (F) How could the company use this information to better manage its business?