Tristar Manufacturing produces two types of battery-operated toy soldiers: infantry and special forces. The soldiers are produced by using one continuous process. Four activities have been identified: machining, setups, receiving, and packing. Resource drivers have been used to assign costs to each activity. The overhead activities, their costs, and the other related data are as follows: Product Machine Hours Setups Receiving Orders Packing Orders
Infantry 20,000 300 900 1,600
Special forces 20,000 100 100 800
Costs $80,000 $24,000 $18,000 $30,000
During the month, 150, 000 infantry and 25,000 special forces were produced. Direct manufacturing costs were $1.50 for the infantry soldiers and $2.50 for special forces. The selling price of the respective units was $4.00 and $7.50. Tristar does not keep any inventory but uses a JIT order system.
1. Calculate the total overhead assigned to each product by using only machine hours to calculate a plantwide (single) rate.
2. Calculate consumption ratios for each activity. (Round to three significant digits.)
3. Calculate a rate for each activity by using the associated driver.
4. Assign the overhead costs to each product by using the activity rates computed above
5. Produce an income statement for each of the toy types and for the company in total.