Question
In: Accounting
Five Card Draw manufactures and sells 23,000 units of Diamonds, which retails for $170, and 26,000...
Five Card Draw manufactures and sells 23,000 units of Diamonds, which retails for $170, and 26,000 units of Clubs, which retails for $190. The direct materials cost is $25 per unit of Diamonds and $31 per unit of Clubs. The labor rate is $20 per hour, and Five Card Draw estimated 124,000 direct labor hours. It takes 2 direct labor hours to manufacture Diamonds and 3 hours for Clubs. The total estimated overhead is $496,000. Five Card Draw uses the traditional allocation method based on direct labor hours.
What is the gross profit per unit for Diamonds and Clubs?
| Gross Profit | ||
| Diamonds | $ | per unit |
| Clubs | $ | per unit |
What is the total gross profit for the year?
b. They use a traditional cost system and estimates next year's overhead will be $180,000, with the estimated cost driver of 180,000 direct labor hours. It manufactures three products and estimates the following costs:
| Small | Medium | Large | |
| Units | 31,000 | 10,000 | 3,000 |
| Direct Material Cost | $6 | $9 | $8 |
| Direct Labor Hours per Unit | 3 | 6 | 9 |
If the labor rate is $25 per hour, what is the per-unit cost of each product?
| Small | Medium | Large | |
| Cost per unit | $ | $ | $ |
c.
| Cost Pool | Cost Driver | Estimated Overhead |
Wholesale | Retail |
| Ordering | Number of Orders | $92,000 | 190,000 | 40,000 |
| Machine Setups | Number of Setups | 102,000 | 210,000 | 130,000 |
| Inspection | Number of Inspections | 74,000 | 60,000 | 14,000 |
What would be the predetermined rate for each cost pool? Round "Rate" answers to two decimal places.
| Cost Pool | Cost Driver | Estimated Overhead |
Total Activity |
Rate | |
| Ordering | Number of Orders | $92,000 | $ | per order | |
| Machine Setups | Number of Setups | 102,000 | $ | per setup | |
| Inspection | Number of Inspections | 74,000 | $ | per inspection | |
Solutions
Expert Solution
Requirement a:
Gross Profit per unit
| Particulars | Diamonds | Clubs |
| Sales per unit | $170 | $190 |
| Less: Cost of goods sold per unit | ||
| Direct material per unit | $25 | $31 |
| Direct labor per unit (2 hours * $20) (3 hours * $20) | $40 | $60 |
| Overhead cost per unit (2 hours * $4) (3 hours * $4) | $8 | $12 |
| Gross profit per unit | $97 | $87 |
Total Gross profit for the year = (23,000 units * $97 per unit) + (26,000 units * $87) = $4,493,000
Alternatively,
| Particulars | Diamonds | Clubs |
| Sales (23,000 Units * $170) (26,000 units * $190) | $3,910,000 | $4,940,000 |
| Less: Cost of goods sold | ||
| Direct Materials (23,000 units * $25) (26,000 units * $31) | $575,000 | $806,000 |
| Direct labor (23,000 units * 2 direct labor hours * $20) (26,000 units * 3 direct labor hours * $20) | $920,000 | $1,560,000 |
| Overhead cost (23,000 units * 2 direct labor hours * $4) (26,000 units * 3 direct labor hours * $4) | $184,000 | $312,000 |
| Gross Profit | 2,231,000 | 2,262,000 |
| Total Gross Profit = $2,231,000 + $2,262,000 = $4,493,000 |
Working Notes:
Predetermined overhead rate = $496,000 / 124,000 direct labor hours = $4.00 per direct labor hour
Requirement b:
Cost per unit
| Particulars | Small | Medium | Large |
| Direct Material cost | $6 | $9 | $8 |
| Direct Labor cost | $75 | $150 | $225 |
| Overhead cost per unit | $3 | $6 | $9 |
| Cost per unit | $84 | $165 | $242 |
Working Notes:
1. Direct Labor cost per unit
Small = 3 direct labor hours per unit * $25 per hour = $75 per unit
Medium = 6 direct labor hours per unit * $25 per hour = $150 per unit
Large = 9 direct labor hours per unit * $25 per hour = $225 per unit
2. Overhead cost per unit
Predetermined overhead rate = $180,000 / 180,000 direct labor hours = $1.00 per direct labor hour
Small = 3 direct labor hours per unit * $1.00 per direct labor hour = $3 per unit
Medium = 6 direct labor hours per unit * $1.00 per direct labor hour = $6 per unit
Large = 9 direct labor hours per unit * $1.00 per direct labor hour = $9 per unit
Requirement c:
| Cost Pool | Cost Driver | Estimated overhead | / | Cost Driver | = | Activity Rate |
| Ordering | Number of orders | $92,000 | / | 230,000 | = | $0.40 per order |
| Machine Setup | Number of setups | $102,000 | / | 340,000 | = | $0.30 per setup |
| Inspection | Number of Inspection | $74,000 | / | 74,000 | = | $1.00 per inspection |
Working Notes:
Cost Driver
Total number of orders = 190,000 + 40,000 = 230,000 orders
Total number of setups = 210,000 + 130,000 = 340,000 setups
Total number of inspection = 60,000 + 14,000 = 74,000 inspections
All the best...
ekkarill92 answered 1 year agoRelated Solutions
Kubin Company's relevant range of production is 26,000 to 35,500 units. When it produces and sells...
Kubin Company's relevant range of production is 26,000 to 35,500 units. When it produces and sells 30,750 units, its average costs per unit are as follows: expense Average Cost per UnitDirect materials$ 8.60 Direct labor$ 5.60Variable manufacturing overhead $ 3.10Fixed manufacturing overhead$ 6.60Fixed selling expense$ 5.10Fixed administrative expense$ 4.10Sales commissions$ 2.60Variable administrative$ 2.60Required: 1. For financial accounting purposes, what is the total amount of product costs incurred to make 30,750 units? 2. For financial accounting purposes, what is the total amount of period costs incurred to...
Kubin Company’s relevant range of production is 26,000 to 35,500 units. When it produces and sells...
Kubin Company’s relevant range of production is 26,000 to 35,500
units. When it produces and sells 30,750 units, its average costs
per unit are as follows:
Average Cost per Unit
Direct materials
$
8.60
Direct labor
$
5.60
Variable manufacturing overhead
$
3.10
Fixed manufacturing overhead
$
6.60
Fixed selling expense
$
5.10
Fixed administrative expense
$
4.10
Sales commissions
$
2.60
Variable administrative expense
$
2.10
Required:
1. Assume the cost object is units of production:
a. What...
Kubin Company's relevant range of production is 23,000 to 27,500 units. When it produces and sells...
Kubin Company's relevant range of production is 23,000 to 27,500
units. When it produces and sells 25,250 units, its average costs
per unit are as follows
Direct Materials
$8.30
Direct Labor
$5.30
Variable Manufacturing Overhead
$2.80
Fixed Manufacturing Overhead
$6.30
Fixed Selling Expense
$4.80
Fixed Administrative Expense
$3.80
Sales Commissions
$2.30
Variable Administrative Expense
$1.80
Required
1. If 23,000 units are produced and sold, what is the variable
cost per unit produced and sold?
2. If 27,500 units are produced...
Kubin Company’s relevant range of production is 23,000 to 27,500 units. When it produces and sells...
Kubin Company’s relevant range of production is 23,000 to 27,500
units. When it produces and sells 25,250 units, its average costs
per unit are as follows:
Average Cost per Unit
Direct materials
$
8.30
Direct labor
$
5.30
Variable manufacturing
overhead
$
2.80
Fixed manufacturing
overhead
$
6.30
Fixed selling expense
$
4.80
Fixed administrative
expense
$
3.80
Sales commissions
$
2.30
Variable administrative
expense
$
1.80
Required:
1. Assume the cost object is units of production:
a. What...
Kubin Company’s relevant range of production is 20,000 to 23,000 units. When it produces and sells...
Kubin Company’s relevant range of production is 20,000 to 23,000
units. When it produces and sells 21,500 units, its average costs
per unit are as follows:
Amount per Unit Direct materials $ 8.00 Direct labor $ 5.00
Variable manufacturing overhead $ 2.50 Fixed manufacturing overhead
$ 4.00 Fixed selling expense $ 4.50 Fixed administrative expense $
3.50 Sales commissions $ 2.00 Variable administrative expense $
1.50 Required:
1. If 20,000 units are produced and sold, what is the variable
cost...
Kubin Company’s relevant range of production is 23,000 to 27,500 units. When it produces and sells...
Kubin Company’s relevant range of production is 23,000 to 27,500
units. When it produces and sells 25,250 units, its average costs
per unit are as follows:
Average Cost per Unit
Direct materials
$
8.30
Direct labor
$
5.30
Variable manufacturing overhead
$
2.80
Fixed manufacturing overhead
$
6.30
Fixed selling expense
$
4.80
Fixed administrative expense
$
3.80
Sales commissions
$
2.30
Variable administrative expense
$
1.80
Required:
1. For financial accounting purposes, what is the total amount
of...
Kubin Company’s relevant range of production is 20,000 to 23,000 units. When it produces and sells...
Kubin Company’s relevant range of production is 20,000 to 23,000
units. When it produces and sells 21,500 units, its average costs
per unit are as follows:
Average Cost per Unit
Direct materials
$
8.00
Direct labor
$
5.00
Variable manufacturing overhead
$
2.50
Fixed manufacturing overhead
$
6.00
Fixed selling expense
$
4.50
Fixed administrative expense
$
3.50
Sales commissions
$
2.00
Variable administrative expense
$
1.50
Required:
1. Assume the cost object is units of production:
a. What...
Kubin Company’s relevant range of production is 23,000 to 27,500 units. When it produces and sells...
Kubin Company’s relevant range of production is 23,000 to 27,500
units. When it produces and sells 25,250 units, its average costs
per unit are as follows:
Average Cost per Unit
Direct materials
$
8.30
Direct labor
$
5.30
Variable manufacturing overhead
$
2.80
Fixed manufacturing overhead
$
6.30
Fixed selling expense
$
4.80
Fixed administrative expense
$
3.80
Sales commissions
$
2.30
Variable administrative expense
$
1.80
Required:
1. For financial accounting purposes, what is the total amount
of...
Kubin Company’s relevant range of production is 23,000 to 27,500 units. When it produces and sells...
Kubin Company’s relevant range of production is 23,000 to 27,500
units. When it produces and sells 25,250 units, its average costs
per unit are as follows:
Average Cost per Unit
Direct materials
$
8.30
Direct labor
$
5.30
Variable manufacturing overhead
$
2.80
Fixed manufacturing overhead
$
6.30
Fixed selling expense
$
4.80
Fixed administrative expense
$
3.80
Sales commissions
$
2.30
Variable administrative expense
$
1.80
Required:
1. If 23,000 units are produced and sold, what is the...
Kubin Company’s relevant range of production is 23,000 to 27,500 units. When it produces and sells...
Kubin Company’s relevant range of production is 23,000 to 27,500
units. When it produces and sells 25,250 units, its average costs
per unit are as follows:
Average Cost per Unit
Direct materials
$
8.30
Direct labor
$
5.30
Variable manufacturing overhead
$
2.80
Fixed manufacturing overhead
$
6.30
Fixed selling expense
$
4.80
Fixed administrative expense
$
3.80
Sales commissions
$
2.30
Variable administrative expense
$
1.80
Required:
1. Assume the cost object is units of production:
a. What...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- How is modern social learning theory different than traditional learning theory ?
- TufStuff, Inc., sells a wide range of drums, bins, boxes, and other containers that are used...
- For all img elements create a style rule that applies a sepia filter with a value...
- Given the two stacks S1 and S2 each with a set of numbers, write an algorithm...
- 12. How might you communicate and promote key features of the plan to others?
- Question text Scenario: The HR director of Sealy Flooring, Ann, approached the customer service manager, Earl...
- question1 An order 360 tormes of hi-gloss paper must process sequentially through the coater and the...
ADVERTISEMENT