Question

Triumph Trophies makes trophies and plaques and operates at capacity. Triumphdoes large custom​ orders, such as the participant trophies for the Minnetonka Little League. The controller has asked you to compare​plant-wide, department, and​ activity-based cost allocation. 

Triumph Trophies Budgeted Information for the Year Ended November 30​, 2014

Forming Department	Trophies	Plaques	Total
Direct materials	$26,000	$23,500	$49,500
Direct manufacturing labor	30,200	13,800	44,000
Overhead costs
Set up			21,560
Supervision			20,680
Assembly Department	Trophies	Plaques	Total
Direct materials	$4,900	$87,150	$92,050
Direct manufacturing labor	15,500	15,500	31,000
Overhead costs
Setup			45,095
Supervision			16,430

Setup costs in each department vary with the number of batches processed in each department. The budgeted number of batches for each product line in each department is as​ follows:

	Trophies	Plaques
Forming department	37	117
Assembly department	43	102

Supervision costs in each department vary with direct manufacturing labor costs in each department.

1.	Calculate the budgeted cost of trophies and plaques based on a single​plant-wide overhead​ rate, if total overhead is allocated based on total direct costs.
2.	Calculate the budgeted cost of trophies and plaques based on departmental overhead​ rates, where forming department overhead costs are allocated based on direct manufacturing labor costs of the forming department and assembly department overhead costs are allocated based on total direct costs of the assembly department.
3.	Calculate the budgeted cost of trophies and plaques if Triumph allocates overhead costs in each department using​ activity-based costing.
4.	Explain how the disaggregation of information could improve or reduce decision quality.

Answer 1