The controller has asked you to compare plant wide, department, and activity-based cost allocation (see below for questions for this problem)

Overhead Costs
Forming Dept
Materials Handling ....................................................................$5,700
Quality Inspection .....................................................................$6,300
Utilities ....................................................................................$10,386
$22,386
Assembly Dept
Materials Handling .....................................................................$9,200
Quality Inspection ....................................................................$13,800
Utilities .....................................................................................$10,960
$33,960
Packaging Dept
Materials Handling ....................................................................$18,315
Quality Inspection .....................................................................$14,985
Utilities ........................................................................................$8,934
$42,234

Other info:
Materials handling and quality inspection costs vary with the number of batches processed in each dept. The number of batches for each product like in each department is as follows:

a. Calculate the cost per unit of Trophies, Plaques and Medallions based on a single plant wide overhead rate, if total overhead is allocated based on total direct costs
b. Calculate the cost per unit of trophies, plaques and medallions based on departmental overhead rates, where forming dept overhead costs are allocated based on direct labor costs of the forming dept, assembly dept overhead costs are allocated based on total direct costs of the assembly dept and packaging dept overhead costs are allocated based on direct materials costs of the packaging dept
c. Calculate the cost per unit of trophies, plaques and medallions if the company allocates overhead costs in each dept using a activities-based costing
d. Explain how the disaggregation of information could improve or reduce decisionquality

Transcribed Image Text:

Forming department Direct materials direct labor Total Assembly Dept Direct Materials Direct Labor Total Packaging Dept Direct Materials Direct Labor Total Trophies S2.50 S3.00 S5.50 Plaques Medallions $0.50 0.60 1.10 S1.50 $1.20 S2.70 0.50 $1.50 S2.00 S1.25 $1.50 S2.75 S0.25 S0.50 S0.75 S0.75 S0.75 1.50 S0.50 S0.25 S0.75 S0.10 S0.10 0.20 number of units 5.200 7.500 16.700 Trophies 116 63 80 Plaques Medallions Forming Dept Assembly Dept Packaging Dept 40 83 100 84 190