Case #1 Palace Inc. manufactures two product lines (Deluxe and Standard). Currently, the company allocates overhead...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Case #1 Palace Inc. manufactures two product lines (Deluxe and Standard). Currently, the company allocates overhead costs to the product lines based on direct labour hours. For 2021, the company gathered the following data for the two product lines: Deluxe Standard Sales (in units) 5,000.00 40,000.00 Sales price (per unit) $11,700.00 $8,550.00 Direct materials and direct labour costs per unit $3,240.00 $2,340.00 Manufacturing support costs per unit $1,320.00 $1,860.00 Last year, the company purchased an expensive piece of equipment that enabled the company to add more sophisticated options to the Deluxe product line. In response, the CFO suggested that the company implement an activity-based costing (ABC) system to provide useful information for product mix and advertising strategy purposes. To help with this decision, the company's cost accountant gathered the following data: Activity Setups Machine-related Packing Inspection Required Cost Driver Number of setups Number of machine hours Number of shipments Number of inspection hours Cost Deluxe Standard Total $850,000 800.00 200.00 1,000.00 $57,400,000 700,000.00 700,000.00 1,400,000.00 $9,000,000 75,000.00 300,000.00 375,000.00 $13,750,000 178,250.00 165,500.00 343,750.00 Total manufacturing overhead costs $81,000,000 (A) Using the current costing system, compute the total manufacturing cost per unit and the profit per unit for each product line. (B) Using ABC, compute the total manufacturing overhead cost that would be allocated to each product line and the manufacturing overhead per unit for each product line. (C) Using ABC, compute the total manufacturing cost per unit and the profit per unit for each product line. 1 Case #1 Palace Inc. manufactures two product lines (Deluxe and Standard). Currently, the company allocates overhead costs to the product lines based on direct labour hours. For 2021, the company gathered the following data for the two product lines: Deluxe Standard Sales (in units) 5,000.00 40,000.00 Sales price (per unit) $11,700.00 $8,550.00 Direct materials and direct labour costs per unit $3,240.00 $2,340.00 Manufacturing support costs per unit $1,320.00 $1,860.00 Last year, the company purchased an expensive piece of equipment that enabled the company to add more sophisticated options to the Deluxe product line. In response, the CFO suggested that the company implement an activity-based costing (ABC) system to provide useful information for product mix and advertising strategy purposes. To help with this decision, the company's cost accountant gathered the following data: Activity Setups Machine-related Packing Inspection Required Cost Driver Number of setups Number of machine hours Number of shipments Number of inspection hours Cost Deluxe Standard Total $850,000 800.00 200.00 1,000.00 $57,400,000 700,000.00 700,000.00 1,400,000.00 $9,000,000 75,000.00 300,000.00 375,000.00 $13,750,000 178,250.00 165,500.00 343,750.00 Total manufacturing overhead costs $81,000,000 (A) Using the current costing system, compute the total manufacturing cost per unit and the profit per unit for each product line. (B) Using ABC, compute the total manufacturing overhead cost that would be allocated to each product line and the manufacturing overhead per unit for each product line. (C) Using ABC, compute the total manufacturing cost per unit and the profit per unit for each product line. 1
Expert Answer:
Answer rating: 100% (QA)
A Using the current costing system Total manufacturing cost per unit Direct materials and direct labor costs per unit Manufacturing support costs per unit Profit per unit Sales price per unit Total ma... View the full answer
Related Book For
Managerial Accounting Tools for Business Decision Making
ISBN: 978-1118033890
3rd Canadian edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso, Ibrahim M. Aly
Posted Date:
Students also viewed these accounting questions
-
Dear sir, please help me to do this question, it is so hard and complex
-
The following information is taken from the records of West End Distributors Inc. for the month ended May 31. Units Unit cost May 1 6 12 19 29 Purchase #1 Purchase #2 Purchase #3 ...
-
Question 16 10 points As shown in the figure below, assume that 0=1150 and the jet has a velocity of 25 m/s and a diameter of 40 mm. What is the component of the force acting on the blade in the x-...
-
TRUE OR FALSE. 6 POINTS EACH. (Always assume "Other things equal.") 1. In economics in the short run, a firm will have both fixed and variable resources. 2. In economics, the short run is defined as...
-
Use the binomial distribution in which n = 6 and p = 0.3 to calculate the following probabilities: a. x is at most 1. b. x is at least 2. c. x is more than 5. d. x is less than 6.
-
Analyze the average-case performance of the linear search algorithm, if exactly half the time the element x is not in the list and if x is in the list it is equally likely to be in any position.
-
Suppose you are considering acquiring a house by assuming the remainder of the existing 30-year mortgage on the property. If there are 237 fixed monthly payments of $1,041.23 left to be paid, with...
-
A motorcycle manufacturer is determining its production schedule for the next 6 months. The cost of manufacturing a motorcycle during each month is provided on the worksheet. At the end of each...
-
If ABCD is a square and AB = 10, what is the measu
-
1. What are functional silos and how did they evolve in organizations? 2. What is the relationship between organizational functional silos and IS functional silos? 3. Compare and contrast...
-
Assets Cash $ 19,927 Receivables 61,469 Inventory 10,128 1. The following is the balance sheet for Ford Motor Company as of December 31, 1994 (in millions): Accounts Payable 1. Liabilities Debt due...
-
Anton invested $68000 in a 3-year project that is expected to pay $X in year 1; $Y in year 2 and $Z in year 3. X, Y and Z are positive. The first cash flow is half the size of the second and twice...
-
Larry fires a cannonball that soars through the air for 5 seconds and lands 4 4 0 meters away what is the launch speed and angle for the cannonball
-
Daily Enterprises is purchasing a $ 1 0 . 4 million machine. It will cost $ 5 2 0 0 0 to transport and install the machine. The machine has a depreciable life of five years and will have no salvage...
-
The most common form of color blindness, known as redgreen blindness, is an X-linked recessive trait affecting about 8% of the male population in the United States. What proportion of females would...
-
what condition is not necessary to use the retail method to provide inventory results
-
Identify Thank You mission, strategy and core competencies. Identify strategy changes that have taken place at Thank You since its founding in 2008. Your answer must in text references and must be...
-
Core Petroleum owns 60%, Dwight Corporation owns 30%, and Webb Company owns 10% of the working interest property number 2008. Core Petroleum is the operator and bills Dwight and Webb monthly for...
-
Longhorn Oil Corporation transferred an item of equipment from its wholly owned warehouse to a jointly owned lease in which it has a 70% WI. The item of equipment is in Condition B, and the current...
-
Brown Oil Company is the operator of Lease A and Lease B and has a 60% WI in each lease. A piece of equipment, which originally cost $30,000, is transferred from Lease A to Lease B. The current...
Study smarter with the SolutionInn App