Using ABC to assess prices Refer to the information in Exercise 4-9 to answer the following requirements.
Question:
Using ABC to assess prices Refer to the information in Exercise 4-9 to answer the following requirements.
Required
1. Usin. ABC comtute the overhead cost ter unit for each product line.
2. Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $200 for Model 145 and $180 for Model 212.
3. If the market price for Model 145 is $800 and the market price for Model 212 is $470, determine the profit or loss per unit for each model. Comment on the results.
Reference Exercise 4-9'
Using the plantwide overhead rate to assess prices Real Cool produces two different models of air conditioners. The company produces the mechanical systems in their components department The mechanical systems are combined with the housing assembly in its finishing department. The activities, costs, and drivers associated with these two manufacturing processes and the production support process follow.
Additional production information concerning its two product lines follows.
Required
1. Using a plant wide overhead rate based on machine hours, compute the overhead cost per unit for each product line.
2. Determine the total cost per unit for each product line if the direct labor and direct materials costs per unit are $250 for Model 145 and $180 for Model 212.
3. If the market price for Model 145 is $800 and the market price for Model 212 is $470, determine the profit or loss per unit for each model. Comment on the results.
Fundamentals of Cost Accounting
ISBN: 978-0077398194
3rd Edition
Authors: William Lanen, Shannon Anderson, Michael Maher