Broadening Your Perspective
Iman-N-Lah Rasheed
Acc 561
July 22, 2013 11:59 MST
Rachael Jenks

Broadening Your Perspective
Introduction
Ideal Manufacturing Company is located in Sycamore, Illinois and has a research and development department that for many years has been the only contributor to the company’s new farm machinery products. This department only provides services to in-house manufacturing departments, and they all produce agriculture, farm and ranch related machine products. The company has never sold to the outside population but has been long approached by others to do so. Because the cost of running this department are getting so expensive the company is now contemplating selling to the outside to help cover some of the rising cost.
The Four Pools & Costs
The R & D activities fall into four pools of costs and those are: Market Analysis=$1,050.000, Product Design=$2,350.000, Product Development=$3,600.000 and Prototype Testing=$1,400.000. To help Ideal Manufacturing Company decide if this is something they really want to do they should first look at the activity-based overhead cost rate for each of the four activity pools. When we look at Market Analysis with an annual cost of $1,050.00 and divide that by 15,000 which is the number of estimated drivers we get a sum of $70, for Product Design the annual cost is $2.350.000 and the number of estimated drivers is 2,500 which gives us $940. Product Development has an annual cost of $3,600.000 and the estimated drivers are 90 and that gives us $40,000. Prototype Testing has an annual cost of $1,400.000 and the estimated drivers are 500 which is $2,800.
In House Manufacturing Department Question B
The amount that would be charged to an in house manufacturing department that consumed 1,800 hours of market analysis time, provided 280 designs related to 10 products and they requested