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Cary Company manufactures two models of industrial componentsa Standard model and an Advanced Model. It has provided the following information with respect to these two products:

	Standard			Advanced
Number of units produced and sold		20,000			10,000
Selling price per unit	$	150		$	200
Direct materials per unit	$	40		$	60
Direct labor cost per unit	$	30		$	30
Direct labor-hours per unit		1.50			1.50

The company considers all of its manufacturing overhead costs ($1,346,250) to be fixed and it uses plantwide manufacturing overhead cost allocation based on direct labor-hours.

5a. Go to the tab titled Cost Allocation Comparison. Create formulas in cells B2 through C3 that compute the total overhead cost allocated to each product using the plantwide and activity-based approaches. (Hint: If you complete this step correctly, the dollar amounts shown in cells D2 and D3 should both equal $1,346,250.) 5b. How much overhead is allocated to the Standard and Advanced models using the plantwide approach (cells B2 and C2)? How much overhead is allocated to the Standard and Advanced models using the activity-based approach (cells B3 and C3)? 5c. Using Charts, create a bar chart that includes the following design elements: (1) it will include two bars pertaining to the Standard model followed by two bars pertaining to the Advanced model, (2) the first bar for each model will quantify the models total manufacturing overhead cost according to the plantwide approach, whereas each models second bar will quantify the models total manufacturing overhead cost according to the activity-based approach. (Your instructor may require you to upload this file in Part 6). 5d. Based on your completed bar chart, which model is overcosted using the plantwide approach? Which model is undercosted?

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