T Home A Insert Page Layout B 2 3 Design 4 Production 5 Engineering 6 Total Department Cost Driver CAD-design-hours Engineering-hours Machine-hours Formulas Data C Review Manufacturing Overhead in 2017 $ 39,000 29,600 240,000 $308,600 View D E Usage of Cost Drivers by Customer Contract United Motors 110 70 120 Holden Motors 200 60 2,800 Leland Auto 1. Compute the manufacturing overhead allocated to each customer in 2017 using the simple costing system that uses machine-hours as the allocation base. 2 Compute the manufacturing overhead allocated to each customer in 2017 using department-based manufacturing overhead rates. 3. Comment on your answers in requirements 1 and 2. Which customer do you think was complaining about being overcharged in the simple system? If the new department-based rates are used to price contracts, which customer(s) will be unhappy? How would you respond to these concerns? How else might AP use the information available from its department-by-department analysis of manu- facturing overhead costs? 4. 5. AP's managers are wondering if they should further refine the department-by-department costing sys- tem into an ABC system by identifying different activities within each department. Under what condi- tions would it not be worthwhile to further refine the department costing system into an ABC system? 80 240 1,080 Required

1. Compute the manufacturing overhead allocated to each customer in 2017 using the simple costing system that uses machine-hours as the allocation base. 2. Compute the manulacturing overhead allocated to each customer in 2017 using department-based manufacturing overhead rates. 3. Comment on your answers in requirements 1 and 2 . Which customer do you think was complaining about being overcharged in the simple system? If the new department-based rates are used to price contracts, which customer(s) will be unhappy? How would you respond to these concerns? 4. How else might AP use the information available from its department-by-department analysis of manufacturing overhead costs? 5. AP's managers are wondering if they should further refine the department-by-department costing system into an ABC system by identifying different activities within each department. Under what condibions would it not be worthwhile to further refine the department costing system into an ABC system