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In: Accounting

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 (Engineering hours)	150,000	100	150
Machining (Machine hours)	1,000,000	2,000	3,000
Inspection (Batches)	80,000	50	30

Qubix manufactures 10,000 units of Product A and 7,500 units of Product B per month. Each unit of Product A uses $100 of direct materials and $45 of direct labor, while each unit of Product B uses $140 of direct materials and $75 of direct labor.
Required:
a. Calculate the Design activity proportions for Products A and B.
b. Calculate the Machining activity proportions for Products A and B.
c. Calculate the Inspection activity proportions for Products A and B.
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.
g. Determine the manufacturing cost per unit for Product B.
h. Determine the gross profit per unit for Product A.
i. Determine the gross profit per unit for Product B.

Expert Solution

(a) Calculate the Design activity proportions for Products A and B :-

Product A = Cost * Usage by Product A/Total Usage

= $150000 * 100/250 = $60000

Product B = $150000 * 150/250 = $90000

(b) Calculate the Machining activity proportions for Products A and B:-

Product A = $1000000 * 2000/5000 = $400000

Product B = $1000000 * 3000/5000 = $600000

(c) Calculate the Inspection activity proportions for Products A and B:-

Product A = $80000 * 50/80 = $50000

Product B = $80000 * 30/80 = $30000

(d) Determine the indirect costs assigned to Product A:-

Design	$60000
Engineering	$400000
Inspection	$50000
Indirect costs assigned to Product A	$510000

(e) Determine the indirect costs assigned to Product B :-

Design	$90000
Engineering	$600000
Inspection	$30000
Indirect costs assigned to Product B	$720000

(f) Determine the manufacturing cost per unit for Product A :-

Direct Material per unit	$100
Direct Labor per unit	$45
Indirect cost per unit ($510000/10000)	$51
Manufacturing cost per unit for Product A	$196

(g) Determine the manufacturing cost per unit for Product B :-

Direct Material per unit	$140
Direct Labor per unit	$75
Indirect cost per unit ($720000/7500)	$96
Manufacturing cost per unit for Product A	$311

(h) Determine the gross profit per unit for Product A:-

Selling price per unit	$250
Direct cost per unit ($100 + $45)	$145
Gross Profit	$105

(i) Determine the gross profit per unit for Product B:-

Selling price per unit	$400
Direct cost per unit ($140 + $75)	$215
Gross Profit	$185

ekkarill92 answered 2 years ago

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