Activity-Based Costing-Quantitative Analysis: 

Read the Chandler CorporationPreview the document [PDF] case study and complete the following requirements.

Quantitative Analysis: 

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Chandler Corporation is currently producing several products, including both custom and standard designs. It has received requests for two new products: swimming pool shades and landscape trellises. It is considering whether to produce either or both of these products. Based on the projections in Exhibits 1 to 3 describing the current capacity and required capacity needs for the new products, complete the following requirements:

  1. Using ABC, compute the Predetermined Overhead Rate for each activity.
  2. Compute the cost of unused capacity for each activity and in total.
  3. Compute the TOTAL and UNIT cost of making the full demand of pool shades assuming that Chandler bases its rates on the predetermined overhead rate.
  4. Compute the TOTAL and UNIT cost of making the full demand of trelli, assuming that Chandler bases its rates on the predetermined overhead rate.
  5. Compute the TOTAL and UNIT cost of making the full demand of pool shades assuming that Chandler bases its rates on EXPECTED capacity (used capacity plus required capacity for the full demand of pool shades).
  6. Compute the total and unit cost of making the full demand of trellises assuming that Chandler bases its rates on EXPECTED capacity (used capacity plus required capacity for the full demand of trellises).