Solutions prepared by Mazri Hafiz

Question 1, Required 1

Facility Factory Depreciation

Facility Factory Landscaping
Batch Machine Set-Ups
Product Product Design
Unit Painting Desks
Batch Equipment Installation
Batch Quality Control Test
Unit Product Assembly
Batch Purchase Order
Unit Sewing Clothing

Question 2, Required 1

Estimated Overhead Expected Use Overhead Rate

$4 per DL
$1,240,000.00 $310,000.00 dollar

The Cordoba The Gibson

Selling Price $8,000.00 $10,000.00
Direct Material Cost $400.00 $500.00
Direct Labour Cost $800.00 $600.00
Applied Overhead $3,200.00 $2,400.00

Gross Profit Percentage 45% 65%

Discontinue the Cordoba

Question 2, Required 2
 Overhead
Activity Cost Pools Estimated Overhead Expected Use Rate
Receiving $200,000.00 80,000 2.5
Forming $120,000.00 300,000 0.4
Asembling $100,000.00 400,000 0.3
Testing $80,000.00 40,000 2.0
Painting $140,000.00 200,000 0.7
Packaging and Shipping $600,000.00 310,000 1.9

The Cordoba The Gibson

Selling Price $8,000.00 $10,000.00
Direct Material Cost $400.00 $500.00
Direct Labour Cost $800.00 $600.00
Applied Overhead
Receiving $250.00 $750.00
Forming $32.00 $112.00
Assembling $25.00 $50.00
Testing $360.00 $1,800.00
Painting $70.00 $210.00
Pakaging/Shipping $1,548.38 $1,161.29

Gross Profit Percentage 56.43% 48.17%

Discontinue the Gibson

Question 2, Required 3

Advantages:
1) More accurate overhead costing
2) Better management decisions
3) Better control of overhead costs

Disadvantages:
1) Costly system to use
2) Some arbitrary allocations can still exist