Manufacturing Analysis Paper
Peter Stifner
ACC 561
February 1, 2016
Some Doofus Professor

Manufacturing Analysis Paper
A regulatory analysis for the Ideal Manufacturing Company revealed several issues with the company. While the Research and Development portion of the company has been successful, the prestige is bought with significant costs which the company hopes to offset with outside business. The issue at hand is to decide if Ideal should proceed with outside Research and Development for other enterprises to help offset the cost or find other avenues to pursue.
Activity-Based Overhead Costs and Drivers
Ideal Manufacturing activity-based uses in each activity cost item some amount of overhead. The four activity items exist which are revealed by the company. Prototype testing, product design, product development and market analysis are each of the activities which the company engaged. The annual cost of each are; $1,400,000 used in prototype testing, product design is $2,350,000, $3,600,000 used in product development, and market analysis is $1,050,000. (Kimmel, 2011) Each activity also has drivers which are prototype testing estimated 500 tests, product design estimated 2,500 designs, product development estimated 90 products, and market analysis estimated 15,000 hours. To determine an activity-based overhead rate for each activity a calculation such as the following in which the products configure activity cost estimated overhead divided by the cost drivers which equal the activity-based overhead rate. Using the formula as mentioned earlier, the activity-based overhead rate for the four activities are;
Prototype testing - $2,800, Product Design - $940, Product development -$40,000
And Market Analysis - $70
In-House Costs
Ideal Manufacturing would at one point want to ask the question, “How much cost would be charged to an in-house manufacturing