(Solution) - Alpha Group a division of Dame Company manufactures a variety -(2025 Original AI-Free Solution)

Paper Details

Alpha Group, a division of Dame Company, manufactures a variety of both high- and low-volume products. The following information is for Alpha Group's most recent year of operation:

Alpha Group's existing costing system allocates all machine-related overhead based on machine hours, all materials-related overhead based on direct material cost, and all remaining overhead based on direct labor cost. However, a recent study determined that machine setup costs and material handling costs are primarily related to the number of setups performed; materials administration cost is primarily related to the number of purchase orders issued; and freight-in is primarily related to pounds of materials. Alpha Group does not keep significant materials inventories on hand.
Required:
(1) Calculate the three overhead rates in Alpha Group's existing costing system for the most recent year.
(2) Create an ABC system for Alpha Group, making only the changes suggested by the results of the recent study. Give your answer in the form of a list of cost pools. Beside the name of each pool, list the driver to be used to allocate that cost pool to products.
(3) Calculate the overhead (driver) rates that the ABC system should use for the most recent year.