Question

Walnut Systems produces two different products, Product A, which sells for $135 per unit, and Product B, which sells for $192 per unit, using three different activities: Design, which uses Engineering Hours as an activity driver; Machining, which uses machine hours as an activity driver; and Inspection, which uses number of batches as an activity driver. The cost of each activity and usage of the activity drivers are as follows:    

	Cost		Usage by Product A			Usage by Product B
Design (Engineering Hours)	$	157,724		218			306
Machining (Machine Hours)	$	546,840		1,150			3,190
Inspection (Batches)	$	26,400		41			19

Walnut manufactures 10,500 units of Product A and 6,900 units of Product B per month. Each unit of Product A uses $45 of direct materials and $17 of direct labor, while each unit of Product B uses $70 of direct materials and $31 of direct labor.

Required:

a. Calculate the activity rate for design.



b. Calculate the activity rate for machining.



c. Calculate the activity rate for inspection.

           

d. Determine the indirect costs assigned to Product A.



e. Determine the indirect costs assigned to Product B.



f. Determine the manufacturing cost per unit for Product A. (Round your answer to 2 decimal places.)



g. Determine the manufacturing cost per unit for Product B. (Round your answer to 2 decimal places.)



h. Determine the gross profit per unit for Product A. (Round your intermediate calculation to 2 decimal places. Round your answer to 2 decimal places.)



i. Determine the gross profit per unit for Product B. (Round your intermediate calculation to 2 decimal places. Round your answer to 2 decimal places.)

Answer 1

	Requirement a:
	Calculation of Activity Rate for Design:
A	Engineering Hours usage by Product A	218
B	Engineering Hours usage by Product B	306
C	Total Engineering Hours (A+B)	524	(218 + 306)
D	Design Costs	$157,724
E	Activity Rate for Design (D/C)	$301	($157,724 / 524)
	Requirement b:
	Calculation of Activity Rate for Machining:
A	Machine Hours usage by Product A	1,150
B	Machine Hours usage by Product B	3,190
C	Total Machine Hours (A+B)	4,340	(1,150 + 3,190)
D	Machining Costs	$546,840
E	Activity Rate for Machining (D/C)	$126	($546,840 / 4,340)
	Requirement c:
	Calculation of Activity Rate for Inspection:
A	Number of Batches of Product A	41
B	Number of Batches of Product B	19
C	Total Number of Batches (A+B)	60	(41 + 19)
D	Inspection Costs	$26,400
E	Activity Rate for Inspection (D/C)	$440	($26,400 / 60)
	Requirement d:
	Determination of Indirect Costs assigned to Product A:
	Activity	Activity Rate	Usage	Allocated Costs
	Design	$301	218	$65,618
	Machining	$126	1,150	$144,900
	Inspection	$440	41	$18,040
	Indirect Costs Assigned to Product A			$228,558
	Requirement e:
	Determination of Indirect Costs assigned to Product B:
	Activity	Activity Rate	Usage	Allocated Costs
	Design	$301	306	$92,106
	Machining	$126	3,190	$401,940
	Inspection	$440	19	$8,360
	Indirect Costs Assigned to Product B			$502,406
	Requirement f:
	Determination of Manufacturing Cost per unit for Product A:
A	Indirect Costs Assigned	$228,558
B	Units Manufactured	10,500
C	Indirect Cost per unit (A/B)	$21.77	($228,558 / 10,500)
D	Direct Materials	$45
E	Direct Labor	$17
F	Manufacturing Cost per unit (C+D+E)	$83.77	($21.77 + $45 + $17)
	Requirement g:
	Determination of Manufacturing Cost per unit for Product B:
A	Indirect Costs Assigned	$502,406
B	Units Manufactured	6,900
C	Indirect Cost per unit (A/B)	$72.81	($502,406 / 6,900)
D	Direct Materials	$70
E	Direct Labor	$31
F	Manufacturing Cost per unit (C+D+E)	$173.81	($72.81 + $70 + $31)
	Requirement h:
	Determination of Gross Profit per unit of Product A:
A	Selling Price per unit	$135
B	Manufacturing Cost per unit	$83.77
C	Gross Profit per unit (A-B)	$51.23	($135 - $83.77)
	Requirement i:
	Determination of Gross Profit per unit of Product B:	ekkarill92 Next > < Previous Related Solutions Walnut Systems produces two different products, Product A, which sells for $123 per unit, and Product... Walnut Systems produces two different products, Product A, which sells for $123 per unit, and Product B, which sells for $205 per unit, using three different activities: Design, which uses Engineering Hours as an activity driver; Machining, which uses machine hours as an activity driver; and Inspection, which uses number of batches as an activity driver. The cost of each activity and usage of the activity drivers are as follows:     Cost Usage by Product A Usage by Product B Design... Qubix Systems produces two different products, Product A, which sells for $250 per unit, and Product... Qubix Systems produces two different products, Product A, which sells for $250 per unit, and Product B, which sells for $400 per unit, using three different activities: Design, which uses Engineering Hours as an activity driver; Machining, which uses machine hours as an activity driver; and Inspection, which uses number of batches as an activity driver. The cost of each activity and usage of the activity drivers are as follows: Cost Usage by Product A Usage by Product B Design... Fremont Systems produces two different products, Product A, which sells for $1,000 per unit, and Product... Fremont Systems produces two different products, Product A, which sells for $1,000 per unit, and Product B, which sells for $2,000 per unit, using three different activities: Design, which uses Engineering Hours as an activity driver; Machining, which uses machine hours as an activity driver; and Inspection, which uses number of batches as an activity driver. The cost of each activity and usage of the activity drivers are as follows:    Cost Usage by Product A Usage by Product B Design...    Qubix Systems produces two different products, Product A, which sells for $250 per unit, and...    Qubix Systems produces two different products, Product A, which sells for $250 per unit, and Product B, which sells for $400 per unit, using three different activities: Design, which uses Engineering Hours as an activity driver; Machining, which uses machine hours as an activity driver; and Inspection, which uses number of batches as an activity driver. The cost of each activity and usage of the activity drivers are as follows: Cost Usage by Product A Usage by Product B... A manufacturer produces a product that sells for $10 per unit. Variable costs per unit are... A manufacturer produces a product that sells for $10 per unit. Variable costs per unit are $6 and total fixed costs are $12,000. At this selling price, the company earns a profit equal to 10% of total dollar sales. By reducing its selling price to $9 per unit, the manufacturer can increase its unit sales volume by 25%. Assume that there are no taxes and that total fixed costs and variable costs per unit remain unchanged. If the selling price... Valley Company sells two products. Product M sells for $12 and has variable costs per unit... Valley Company sells two products. Product M sells for $12 and has variable costs per unit of $7. Product Q’s selling price and variable costs are $15 and $10, respectively. If fixed costs are $60,000 and Valley sells twice as many units of Product M as Product Q, what is the break-even point in units for Product M? Cantor Products sells a product for $75. DM costs per unit and DL costs per unit... Cantor Products sells a product for $75. DM costs per unit and DL costs per unit are $45. Depreciation Expenses costs and Production supervisor’s salary are $75,000. Answer the following questions: a. What is the break-even point in units? b. What unit sales would be required to earn a target profit of $200,000? c. Assume they achieve the level of sales required in part b, what is the degree of operating leverage? d. If sales decrease by 30% from that... Your firm produces in a competitive market which sells its product, q, for $240 per unit.... Your firm produces in a competitive market which sells its product, q, for $240 per unit. Hourly variable costs are 20q2 while overhead costs consist of $50 per hour to rent its office space, $50 per hour for advertising, $390 per hour for equipment rental and $10 per hour in attorney fees. All overhead costs are fixed but avoidable. Question: Your firm wants to know its long term prospects. What will be the price and quantity charged in the market... A company that produces and sells a single product for $22 per unit has provided the... A company that produces and sells a single product for $22 per unit has provided the following volume and average cost data for two accounting period: Level of activity (unit) ---------------------------- ---------------- 1,000 2,000 Direct materials ------------------------- ------------------------ $4.00 $4.00 Direct Labor----------------------------------------------------- $3.00 $3.00 Manufacturing overhead-------------------------------------------- $3.50 $2.50 General, selling, and administrative expenses-------------- $1.00 $0.50 1. The best estimate of the total contribution margin when 4,300 units are sold is: $64,500 $45,150 $58,050 $51,600 2. The best estimate of the... Madison Company produces a single product which sells for $30 per unit. Fixed expenses total $13,500... Madison Company produces a single product which sells for $30 per unit. Fixed expenses total $13,500 per month, and variable expenses are $12 per unit. During the current month, sales, in units, totaled 900 units. Using the information above, match each of the items listed below with the appropriate amount.       - Contribution margin per unit.       -    Contribution margin ratio.       -    Break-even point in units.       - Break-even point in dollars.   ... ADVERTISEMENT Subjects Accounting Advanced Math Anatomy and Physiology Biology Chemistry Civil Engineering Computer Science Economics Electrical Engineering Finance History Math Mechanical Engineering Operations Management Physics Psychology Statistics and Probability Nursing Other ADVERTISEMENT Latest Questions Calculate the ideal age of a spouse. Enter either m or f from the keyboard in... Due to a recession, expected inflation this year is only 4.75%. However, the inflation rate in... What are the benefits of doing a pilot program before a full scale rollout of a... It is a calm summer day in southeast Iowa at the Ottumwa air traffic control radar... 1. Write a detailed article on Evolution of attacks on the internet & web [your article... Analyze the role of the contingency plan coordinator (CPC) in the scope of preparing a BIA.... Amazing Manufacturing, Inc., has been considering the purchase of a new manufacturing facility for $500,000. The... ADVERTISEMENT About @ 2020 WizEdu