Oven coffee fan Annual sales (units) 80000 4000 4000 Direct materials cost per unit 25 45...

	Oven	coffee	fan
Annual sales (units)	80000	4000	4000
Direct materials cost per unit	25	45	85
Direct labor cost per unit	15	30	30
Direct labor hours (DLH) per unit	1	2	2

The company has budgeted its annual indirect costs to be $8,736,000. For the past 5 years, the company’s pricing formula has been to set each appliance’s target price at 125% of its unit product cost. Recently, however, the microwave oven has come under increasing price pressure from competitors. The result was that the price of the microwave oven has been lowered to $110.

1.a. Calculate the per unit product cost for each appliance, based on the current job-order costing system.

b. Calculate the new per unit product cost for each appliance, based on the new data collected by Patty, using an activity-based costing system.

c. Compare the new per unit product cost (from the activity-based costing system) with the current per unit product cost (from the job-order costing system) for each appliance.

d. Calculate the target selling price per unit for each appliance, based on the current job-order costing system.

e. Calculate the new target selling price per unit for each appliance, based on the activity-based costing system. f. Compare the new target selling price per unit (from the activity-based costing system) with the current target selling price per unit (from the job-order costing system) for each appliance

		Cost Driver	Oven	Coffee	Fan
Machine maintenance and depreciation	3605000	Machine hours (MH)	39480	31584	60536
Engineering and product repair	1860000	Engineering hours (EH)	27040	9464	31096
Material purchasing, receiving, and handling	1705000	Number of material orders (orders)	5328	2812	6660
Miscellaneous manufacturing overhead	1566000	Square feet of factory space (Sq. ft.)	19,206	24444	43650

Solutions

Expert Solution

ekkarill92 answered 2 years ago

Next > < Previous

Related Solutions

Sales (in units) 60,000 Selling price per unit $25 Manufacturing costs per unit: Materials 5 Direct...

Sales (in units) 60,000 Selling price per unit $25 Manufacturing costs per unit: Materials 5 Direct labor 4 Overhead Variable 4 Fixed 6 Total $19 Gross margin 6 Selling and admin. Expenses per unit 2 Operating income $4 A company in a foreign market offer to buy and the offer specifies the following data units to be sold 10,000 price per unit $12 The incremental profit should be

Sales (16,000 units × $211 per unit) $ 3,376,000 Cost of goods sold Direct materials $...

Sales (16,000 units × $211 per unit) $ 3,376,000 Cost of goods sold Direct materials $ 400,000 Direct labor 688,000 Production supplies 448,000 Plant manager salary 200,000 1,736,000 Gross profit 1,640,000 Selling expenses Sales commissions 128,000 Packaging 256,000 Advertising 100,000 484,000 Administrative expenses Administrative salaries 250,000 Depreciation—office equip. 220,000 Insurance 190,000 Office rent 200,000 860,000 Income from operations $ 296,000 (1) Compute the total variable cost per unit. (2) Compute the total fixed costs. (3) Compute the income from operations...

4).Sales is $100 per unit; direct material is $25 per unit; direct labor is $15 per...

4).Sales is $100 per unit; direct material is $25 per unit; direct labor is $15 per unit, overhead is $10 per unit and $20,000 per month; selling and administrative expenses are $5 per unit and $10,000 per month. The company produced 900 units. Gross margin equals: a).$25,000 b).$40,500 c).$90,000 d).$10,500 5).Sales is $100 per unit; direct material is $25 per unit; direct labor is $15 per unit, overhead is $10 per unit and $20,000 per month; selling and administrative expenses...

The standard cost of product 777 includes 2.70 units of direct materials at $5.80 per unit....

The standard cost of product 777 includes 2.70 units of direct materials at $5.80 per unit. During August, the company bought 28,500 units of materials at $5.90 and used those materials to produce 10,800 units. Compute the total, price, and quantity variances for materials. Total materials variance $ Neither favorable nor unfavorableFavorableUnfavorable Materials price variance $ ...

The standard cost of product 777 includes 2.40 units of direct materials at $6.80 per unit....

The standard cost of product 777 includes 2.40 units of direct materials at $6.80 per unit. During August, the company bought 29,300 units of materials at $7.05 and used those materials to produce 12,400 units. Compute the total, price, and quantity variances for materials. Total materials variance $ FavorableNeither favorable nor unfavorableUnfavorable Materials price variance $ ...

Rome Metals Cost Breakdown Per Unit Direct materials $8 Direct labor $45 Variable overhead $9 Fixed...

Rome Metals Cost Breakdown Per Unit Direct materials $8 Direct labor $45 Variable overhead $9 Fixed overhead $14 Shipping Cost $2 Total Per Unit $78 Rome Metals a US based firm located in Rome, Georgia makes metal brackets used in the construction of warehouse shelving. The firm has a practical capacity of 42,000 units and for the past several years has produced at a constant volume of 35,000 units/year. Rome Brackets are priced at $92/unit. The manufacturing costs incurred to...

Badlands, Inc. manufactures a household fan that sells for $25 per unit. All sales are on...

Badlands, Inc. manufactures a household fan that sells for $25 per unit. All sales are on account, with 30 percent of sales collected in the month of sale and 70 percent collected in the following month. The data that follow were extracted from the company’s accounting records. Badlands maintains a minimum cash balance of $20,000. Total payments in January 20x1 are budgeted at $220,000. A schedule of cash collections for January and February of 20x1 revealed the following receipts for...

1) Annual sales (=demand), D = 4000 sets Order cost, S = $ 25 Holding cost,...

1) Annual sales (=demand), D = 4000 sets Order cost, S = $ 25 Holding cost, H = $ 5 Current order quantity, Q = D/2 = 4000/2 = 2000 sets Optimal order quantity, EOQ = sqrt(2DS/H) = sqrt(2*4000*25/5) = 200 sets Annual holding cost of current policy = H*Q/2 = 5*2000/2 = $ 5000 Annual holding cost of optimal policy = H*EOQ/2 = 5*200/2 = $ 500 Difference in holding costs = 5000 - 500 = $ 4,500 2)...

Compute the cost per equivalent unit for direct materials and conversion for the month.

Perrette Motor Company rebuilds automobile engines that have been damaged or are in need of extensive repair. The rebuilt engine has a 100,000-mile warranty and is purchased by auto shops, large motor pools in companies and governmental units, and some individual auto owners. The plant in Dayton, Ohio, specializes in the Ford V6 engine. Approximately 1,140 to 1,340 engines are rebuilt each month, and the costs of the plant are assigned to monthly production using weighted-average process costing. The current...

1. Compute the direct materials cost per equivalent unit for April.

During April, the first production department of a process manufacturing system completed its work on 350,000 units of a product and transferred them to the next department. Of these transferred units, 70,000 were in process in the production department at the beginning of April and 280,000 were started and completed in April. April's beginning inventory units were 60% complete with respect to materials and 40% complete with respect to conversion. At the end of April, 92,000 additional units were in...

Subjects