Question: Can I get help to make sure I filled out each part correctly? Product Labor Customer Cost Design Support Automation Relations Other Total Production Department
Can I get help to make sure I filled out each part correctly?




Product Labor Customer Cost Design Support Automation Relations Other Total Production Department Indirect Labor $ 2,000,000 5% 75% 10% 0% 10% 100% Material Planning & Logistics 1,200,000 10% 40% 45% 0% 5% 100% Plant Facilities Expense 1,800,000 5% 25% 60% 0% 10% 100% Depreciation Expense 3,500,000 10% 4% 70% 0% 16% 100% Total Production Dept Expense $ 8,500,000 Selling & Administrative Department Design Engineering $ 600,000 75% 5% 10% 5% 5% 100% Administrative Staff Wages 300,000 5% 20% 10% 15% 50% 100% Marketing Expense 400,000 10% 10% 0% 70% 10% 100% Selling Expenses 200,000 0% 0% 0% 90% 10% 1009 Total Selling & Admin. Dept Expense $ 1,500,000 Total Overhead $ 10,000,000 PART #1: Assign Costs to Activity Cost Pools Activity Cost Pools Product Labor Customer Design Support Automation Relations Other Based on the results below we can see the cost of each activity. We are spending a lot on Automation and Labor support. Which you would think our Production Department labor would be less with how much we are spending on Automation. This will Indirect Labor 100,000 $ 1,500,000 200,000 $ 200,000 allow us to see where our expenses are and if they are in line with what is Material Planning & Logistics 120,000 $ 480,000 540,000 60,000 expected. Plant Facilities Expense 90,000 $ 450,000 $ 1,080,000 $ 180,000 Depreciation Expense $ 350,000 $ 140,000 $ 2,450,000 $ $ 560,000 Selling & Administrative Department Design Engineering 450,000 $ 30,000 $ 60,000 $ 30,000 $ 30,000 Administrative Staff Wages 15,000 $ 60,000 30,000 $ 45,000 $ 150,000 Marketing Expense 40,000 40,000 $ 280,000 $ 40,000 Selling Expenses 180,000 $ 20,000 Activity Cost Pool Totals $ 1,165,000 $2,700,000 $ 4,360,000 $ 535,000 |$1,240,000Data (continued): Data for Computation of Activity Rates Activity Cost Pools Cost Driver Total Activity Product Design Unique Designs 10 Unique Designs Labor Support Direct Labor Hrs 150,000 Labor Hrs Automation Machine Hrs 50,000 Machine Hrs Customer Relations Unique Customers 40 Unique Customers Other Not Applicable Not applicable PART #2: Calculate Activity Rates Computation of Activity Rates Activity Cost Pools Cost Pool ($) Total Activity Activity Rate Product Design $ 1,165,000 10 $ 116,500.00 Labor Support $ 2,700,000 150,000 $ 18.00 Automation 4,360,000 50,000 $ 87.20 Customer Relations $ 535,000 40 $ 13,375.00 Other $ 1,240,000 N/A N/AProduct Line Data Specialty Applications Mainstream Sales volume 300,000 3,000,000 Average Selling Price $13.45 $4.56 Direct Materials $600,000 $4,500,000 Direct Labor Hrly Wage $20.00 $24.00 Direct Labor hours 50,000 100,000 Machine hours 1,000 49,000 Unique Designs 8 2 Unique Customers 10 30 PART #3: Assign Manufacturing Overhead Costs to Product Lines using Absorption Costing (based on Direct Labor Hours) Absorption-based Costing Profit Analysis Specialty Applications Mainstream Entire Business Pre-Determine Overhead Rate (per DL Hour) Direct Labor Hours Income Statement Direct Labor Hours Income Statement Income Statement Sales $ 4,035,000 $ 13,680,000 $ 17,715,000 Direct Materials $ 600,000 $ 4,500,000 $ 5,100,000 Direct Labor 1,000,000 2,400,000 3,400,000 Manufacturing Overhead $ 18.00 50,000 5,635,000 100.000 20,580,000 $ 26,315,000 Total Product Cost $ 1,065,750 $ 634,250 $ 1,700,000 Product Line Profit $ 4,569,250 $ 19,945,750 24,515,000 Product Line Profit Margin 81.1% 96.9% Period Expenses $ 1,240,000 Total Business Profit $ 23,275,000 Total Business Profit Margin 94.9%Data (continued): Product Lines Product Line Data Specialty Applications Mainstream Sales volume 300,000 3,000,000 Average Selling Price $13.45 $4.56 Direct Materials $600,000 $4,500,000 Direct Labor Hrly Wage $20.00 $24.00 Direct Labor hours 50,000 100,000 Machine hours 1,000 49,000 Unique Designs Unique Customers 10 30 PART #4: Assign Costs to Product Lines using Activity-based Costing Activity-based Costing Product Line Profit Analysis Specialty Applications Mainstream Entire Business Income Activity Rates Activity Measure Statement Activity Measure Income Statement Income Statement Sales 4,035,000 $ 13,680,000 $ 17,715,000 Direct Materials $ 600,000 $ 4,500,000 $ 5,100,000 Direct Labor 1,000,000 2,400,000 3,400,000 Product Design $ 116,500.00 8 932,000 2 233,000 $ 1,165,002 Labor Support $ 18.00 50,000 900,000 100,000 1,800,000 $ 2,800,000 Automation 87.20 1,000 87,200 49,000 4,272,800 $ 4,409,000 Customer Relations 13,375.00 10 133,750 30 401,250 535,030 Total Product Cost $ 3,652,950 $ 13,607,050 17,260,000 Product Line Profit $ 382,050 $ 72,950 $ 455,000 Product Line Profit Margin 9.5% 0.5% Period Expenses $ 1,240,000 Total Business Profit $ (785,000) Total Business Profit Margin 4.49
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