Module 8 Homework 0 Saved Help Save & Exit Submit Fisher Fixtures manufactures three types of lighting fixtures, with model names oi Silver. Gold, and Platinum. It applies all indirect costs according to an annual predetermined rate based on direct labor-hours. The plant controller has recommended that the company switch to an activity-based costing system The controller's staff prepared the following cost estimates for next year (year 2] for the recommended cost drivers. 72-5 Activity Recommended Cost Driver Estimated Cost Estimated Cost Driver Activity HOWE Purchasing material Number of purchase orders a 116,4aa 24o purchase orders Receiving material Direct materials cost 219,236 5. 2,74D,D skipped Setting up equipment Number of production runs 213,12a 123 runs Machine depreciation and maintenance Machinehours 73,186 14,636 hours Ensuring regulatory compliance Number of inspections 426,6\" 5:1 inspections Shipping Number of units shipped 1.04A,BB@ SHELDHH units E Total estimated cost $ 2.092.539 eEook In addition, management estimated 45.000 direct labor-hours for year 2. 3\" Assume that the following cost-driver volumes occurred in January, year 2: Silver Gold Platinum Number of units produced 32.883 13.8% 3.8% References Direct labo rhours 2,063 1.2% 488 Number of purchase orders 1 3 Direct materials costs $ 97,563 $ 60,EBB $ 37,586 Number of production runs 2 3 5 Machine-hours Too 175 106 Number of inspections I! 2 3 Units shipped 32.003 lemon 3,006 Labor costs are based on the contractual rate of $25 per hour. Required: a. Compute the predetermined rate for year 2 for use in the current product-costing system using direct labor-hours as the allocation base. b. Compute the per-unit production costs for each model for January using direct labor-hours as the allocation base and the predetermined rate computed in requirement {6]. 1:. Compute the predetermined overhead rate [or year 2 for each cost driver using the estimated costs and estimated cost driver units prepared by the controller's sta to be used in an ABC system. d. Compute the per unit production costs for each product for January using the cost drivers recommended by the consultant and the predetermined rates computed in requirement [(2). (Note: Do not assume that total overhead applied to products in January will be the same for activity-based costing as it was for the labor-hour-based allocation.) Mc Graw Mc Graw play a menu Hill