Question: I need the answer for the first page and I attach the example 2 that they mention This question is based on Example #2 in
This question is based on Example #2 in the Chapter 4 Example packet. This example uses ABC to cost two different models of TV's. Assume all the data is the same as the problem in the packet, with the exception of the following numbers for the activity allocation base for all the Medium TV's (3000 TV's) produced. # of material handling orders # of machine hours # of packaging hours 1352 17347 4519 Assume that the activity based overhead rates do not change from what was calculated in the problem ($300 per material order handled, $14 per machine hour, and $9 per packaging hour) What is the total cost of producing 1 medium TV, including direct materials, direct labor and manufacturing overhead? Hint: remember that the $660,000 for direct materials and $216,000 for direct labor were for all 3000 medium TV's produced. Likewise, the overhead numbers that you will arrive at using the new activity allocation base numbers are for 3000 TV's. So don't forget to divide your final answer by 3000 to arrive at thedost of 1 TV. Round your final answer to the nearest whole number, and don't enter dollar signs. A company makes TV's. They have been using a plantwide overhead rate to allocate overhead costs to two TV models (using DL hours as the allocation base). The controller has asked his staff to do an analvsis of the cost of the TV models using Activity Based Costing. This company normally prices their TV's at 300% of manufacturing cost. Presently this company is the low cost leader on Medium TV's, but faces competitive pressure on the Large TV's. Cost the two model of TV's under the two methodologies. Which TV's have been over or under-costed? Medium TV's Large TV's Total Direct Material Cost $660,000 Total Direct Labor Cost $216,000 Production Volume DL Hours S1,240,000 S384,000 4000 units 6000 3000 units 9000 Total manufacturing overhead- $800,000 Primary production activities that make up Total Manufacturing Overheadd Cost Cost Driver Materials Handling $150,000 # material orders handled Machine Processing $560,000 # machine hours Packaging Total $90,000 # packaging hours $800,000 Medium TV's Large TV's Material Orders Handled 300 Machine hours Packaging hours 20,000 4,000 200 20,000 6,000
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