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CoursHeroTranscribedText: Koontz Company manufactures two models of industrial componentsa Basic model and an Advanced Model. The company considers all of its manufacturing overhead costs to be xed and it uses plantwide manufacturing overhead cost allocation based on direct laborhours. Koonlz's controller prepared the segmented income statement that is shown below for the most recent year (he allocated selling and administrative expenses to products based on sales dollars): Basic Advanced Total Number of units produced 20'000 10.000 3.3300 and sold 3,000.0 2,000.0 5,000.0 sakes $ on $ on $ 00 2,300.0 1,350.0 3,650.0 Cost of goods sold 00 00 00 T00,00 550,00 1,350.0 Gross margin 0 0 00 Selling and administrative 190.00 480.00 1,200.0 expenses 0 0 00 150.00 Net operating income [loss] $(20,000) $ 110.000 $ 0 Direct laborers are paid $20 per hour. Direct materials cost $40 per unit tor the Basic model and $60 per unit for the Advanced model. Koontz is considering a change from plantwide overhead allocation to a departmental approach. The overhead costs in the company's Molding Department would be altocated based on machinehours and the overhead costs in its Assembly and Pack Department would be allocated based on direct laborhours. To enable further analysis, the controiler gathered the following information: Moldin Assemble and g Pack Total Manufacturing T815 1,350.0 overhead costs $ 00 $ 561590 $ 00 Direct labor hours: 10.00 Basic 0 20.000 30.000 Advanced 5.000 10.000 15.000 Machine hours: 12,00 Basic 0 - 12.000 10.00

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