Seligram, INCORPORATION

The Seligram, INC. offers provided electronic digital testing of various components as 1983. One among 11 sections of the company, Electronic Testing Operations (ETO), has played out a central role inside the testing functions. However , scientific advancement of testing and outdated equipment have questioned the company's prospect in the industry. The main issue, in the introduction in the new equipment, Seligram must find maximum system to regulate overhead cost. Q2

(a) Single burden pool

Cost of five components under existing system

Product

Direct Labor$

Burden(DL*burden rate)

Total cost(DL+ Burden)

ICA

$917

$1, 329. 65

$2, 247

ICB

$2, 051

$2, 973. ninety five

$5, 025

CAPACITOR

$1, 094

$1, 586. 30

$2, 680

AMPLIFIER

$525

$761. 25

$1, 286

DIODE

$519

$752. 55

$1, 272

Total

$12, 510

(b) Two-burden pool

accounting manager's pitch

Product

Immediate Labor$

E& A Burden

Machine-hour

Machine-burden

Total Price

ICA

$917

$183. 40

18. a few

$1, 480. 00

$2, 580. 40

ICB

$2, 051

$410. 20

forty

$3, 2 hundred. 00

$5, 661. 20

CAPACITOR

$1, 094

$218. 80

several. 5

$600. 00

$1, 912. 80

AMPLIFIER

$525

$105. 00

5

$400. 00

$1, 030. 00

DIODE

$519

$103. 80

12

$960. 00

$1, 582. 80

Total

       

$12, 767. 20

(c) Three burden pool

consultant's proposal

Product

Direct Labor$

E& A

Burden

Primary room-hour

Mech. room-hour

Test room burden

Total cost

ICA

$917

$183. 40

8. 5

10

$1, 664. 69

$2, 765. 2009

ICB

$2, 051

$410. 20

14

21

$3, 815. 14

$6, 276. 34

CAPACITOR

$1, 094

$218. eighty

a few

4. your five

$696. 86

$2, 009. sixty six

AMPLIFIER

$525

$105. 00

four

1

$365. 99

$995. 99

DIODE

$519

$103. 70

7

5

$1, 006. 53

$1, 629. thirty-three

Total

         

$13, 676. 41

Q4

The Seligram, INC. should consider consultant's three-overhead-pool system. Though cost of five pieces are not required lower than costs of classic system, multiple cost pool have plainly reflect extra cost new driver in ETO. Two away of five pieces, as indicated in the chart, CADACITOR and AMPLIFIER, showed reduction in the overall costs. Also, further splits in overhead costs, Main Room and Mechanical overheads, reduced 67% of overhead cost of Cadacitor and 4% of overhead of Amplifier by costs of traditional way. Such reductions suggest that expense pools include appropriately tracked to each testing activities. However, the company can mix cost pools to further improve costing analysis. Two components, ICA and ICB, demonstrate that they take in the most labor hours in both assessment rooms. In fact, cost research based on consult's assessment, both equally costs elevated 19% and 20% in the traditional priced at system. Both equally components illustrated labor intensive nature; however , the multiple cost pools failed to reflect their very own illustrated character. The overhead costs allocated to immediate labor costs have proved to be the ideal expense analysis. In short, illustrated characteristics of activities may not always match the assuming price pools in these components. Q5

The new equipment should consider as a separate cost center. The ETO is investing a lot of money for just one or two clients. The existing price system transactions cost in other customers and increase the selling price, and drive them apart. This is unjust. We can see that clearly inside the appendix. In table1, the brand new machine pushes the machine rate much higher. In table2, the new machine price dramatically may differ in the initially three years. It is unreasonable to merely add this kind of burden towards the exist burden, this can be demonstrated on table2 (column Total new key room rate). Since the direct labor of recent machine is somewhat more expensive, we could add this to the new hour rate. This can make the new price center easy to calculate. Provided that the machine hour and responsibility of the main room and the mech. Room will never change in almost 8 years, we ought to use an built-in rate contained three parts in fresh machine expense pool. a) The sum of downgrading, engineering need, and fixed portion of the estimated ALSO divided by the...

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