Byp17-2 ideal manufacturing company of sycamore, illinois

R&D activities fall into four pools with the following annual costs. Market analysis $1,050,000 Product design 2,350,000 Product development 3,600,000 Prototype testing 1,400,000 Activity analysis determines that the appropriate cost drivers and their usage for the four activities Activities Cost Drivers Estimated Drivers Market analysis Hours of analysis 15,000 hours Product design Number of designs 2,500 designs Product development Number of products 90 products Prototype testing Number of tests 500 tests Instructions (a) Compute the activity-based overhead rate for each activity cost pool. (b) How much cost would be charged to an in-house manufacturing department that consumed 1,800 hours of market analysis time, was provided 280 designs relating to 10 products, and requested 92 engineering tests? (c) How much cost would serve as the basis for pricing an R&D bid with an outside company on a contract that would consume 800 hours of analysis time, require 178 designs relating to 3 products, and result in 70 engineering tests? (d) What is the benefit to Ideal Manufacturing of applying activity-based costing to its R&D activity for both in-house and outside charging purposes?


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