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1. How does the current system capture manufacturi...




1. How does the current system capture manufacturing costs and assign them to products? (Prove the overhead rate is 105% of material cost). 2. Calculate the volume-based (traditional) cost per reel for grades A-D identified in Exhibit 1. 3. What is the cost for Forest Hill to conduct a grade change? 4. What is the cost for Forest Hill to slit a reel of paperboard? As shown in Exhibit 1, only products A and C are routinely slit. For purposes of your analysis, assume the slitting equipment must be set up and adjusted between each reel slit. 5. Calculate the new volume-based overhead rate after removing grade change and slitting costs. 6. Determine the activity-based costs for grades A-D. 7. Prepare a table that illustrates the percentage change in costs between the volume-based system and the strategic activity-based system. 8. What conclusions can you draw from your analysis? As a consultant to Forest Hill, what actions would you recommend? Just these 8 questions.


Paper#3444 | Written in 18-Jul-2015

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