sparkle company makes three types of sunglasses stars Greek and fashion sparkle presently applies overhead using a preditarmain overhead rate based on direct
labor hours a group of comapny employees recooanded that sparkle switch to activity based costing and identified for yers 2 for each activity center
activity cost drive base est cost est cost drive units
production setup number of production run $80000 200 runs
order processing nu of order 160000 200 orders
material handling nu of pound material 40000 8000 pounds
equip depriciation nu of machine hours 140000 100000 hours
quality management nu of inspection 100000 40 inspection
packing and shipping nu of units shipped 80000 20000 units
$ 600000
in addition manaegment estimated 2000 direct labor hours for year 2 and the activities occured in feb of year 2
nu of units produced 1000 500 400
direct material costs $ 4000 2500 2000
direct labor hours 100 120 110
nu of orderd 8 8 4
number of production run 4 8 16
nu of pound material 400 200 200
nu of machine hours 500 300 300
nu of inspection 2 2 2
nu of units shipped 1000 500 300
1compute the predetairmian overhead for year 2 for each cost drive recommanded by employees also compute a predetairmed overhead rate using direct labor hour
as the allocation base
2compute the production costs for each product for feb using direct labor hours and preditairmind as a llocation base and the predetairmained rate in
requirment a2
3compute the production cost for feb using cost drivers recommended by employees and predetarmaind rate computed in a1 do not assume the that total overhaid
applied to products in feb will be the same for ABC as it was for the labor hours based allocation
4how you account for the discrepancy between the product costing using direct labor hour as allocation base and the product cost using ABC