Problem #$1$ a$.$ Find the DM and DL costs in the $$Estimates$$ section of the Data spreadsheet. Based on these estimates, what is the total cost to produce one specialty candle under the ABC system? b$.$ Now, do the same calculation under the departmental MOH allocation method used in Chapter $2.$ What is the total cost? c$.$ Which estimate do you believe is the most accurate? Defend your answer. Problem #$2$ Refer back to Jeremiah and Josey$$s initial argument about ABC costing systems. Now that you have spent the time creating an ABC system, do you think that the improved information from the ABC system is worth the additional work involved with creating and maintaining the system? Defend your answer. Name: DO NOT COPY $$ COPYRIGHTED MATERIALS $$ DO NOT REPLICATE$/$DUPLICATE Chapter $3$Using Activity$-$Based Costing $3-4$ Ethical Issues Jordan moved slowly down the hall, reading back over his report as he neared Josey$$s office. He was pleased with his work, but he needed to ask a few clarifying questions before continuing. He knocked on the door, and Josey called him in but motioned for him to wait while she finished a Zoom meeting with Jeremiah. Jordan came in and sat down but was quickly uncomfortable as he listed to Jeremiah and Josey arguing about the new ABC system. Josey was completely against the waste of resources, especially the amount of time she would have to spend ensuring it was done correctly. Jeremiah had sounded defensive in his insistence. Jordan$$s mind started racing. The company had hired Li specifically to help with the ABC system. If they dropped the system, they would have to let her go$,$ which was very depressing. He enjoyed working with Li$.$ She was a great colleague who worked extremely hard and did excellent work. He paused again. Would they really let Li go$?$ The company was family$-$owned and operated, but they were still trying to diversify their employee base. He only had about six months seniority$,$ not enough to be sure that they would keep him if they downsized the department. With political pressures, the company might choose to downsize him instead. He tried to push his worries away as Josey ended the Zoom meeting and turned to face him, but he couldn$$t$.$ The possibility that he might lose Li as a colleague had been troubling; the possibility that he might lose his own job in this economy was worse. Now he was downright scared. Problem #$3$ Answer each of the following questions about Jordan$$s situation: a$.$ Based on your opinion of ABC costing, do you think that Jordan$$s fear that the company will drop the ABC system is justified? Defend your answer

Estimates for $3"$ specialty candle $($for Problem $1)$ Estimated DM Cost per speciality candle $$$$2\mathrm{.}21$ Estimated DL Cost per speciality candle $$$$0\mathrm{.}66$ Departmental Rates $($for Problem $1)$ Drivers Used Estimated Drivers Total Overhead Department Pouring DL Hours $262,080$$$4,993,000$ Finished Batches $1,248,000$$$3,328,035$