Kate Systems produces two different products. Below is the data related to the company's two products:...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Kate Systems produces two different products. Below is the data related to the company's two products: Product A Product B 1,000 $ 500 $ 200 $ Sales Price per unit $ Direct Materials per unit $ Direct Labor per unit Number of Units $ 10,000 2,000 750 350 7,500 Part A (Traditional Costing-Plantwide rate) Kate currently uses a normal job order costing system with estimated total manufacturing overhead of $6,800,000 applied to the two products on the basis of machine hours. Total machine hours estimated to be 8,000. 1. Compute the current overhead rate. 6,800,000/8,000-850 2. Determine the indirect costs (MOH) applied to Product A if Product A uses 2,000 machine hours. Calculate the total MOH applied and MOH applied per unit for Product A. 850*2000=1,700,000. 1,700,000/10,000=170 3. Determine the indirect costs (MOH) applied to Product B if Product B uses 6,000 machine hours. Calculate the total MOH applied and MOH applied per unit for Product B. 4. Determine the Gross Profit Dollars & Gross Profit Percentage per unit and in total for Product A 5. Determine the Gross Profit $ & Gross Profit % per unit and in total for Product B Kate is considering implementing an ABC system and determined the determined the following are the three primary activities: Design, which uses Engineering Hours as an activity driver; Machining, which uses machine hours as an activity driver; and Inspection, which uses number of batches as an activity driver. The cost of each activity and usage of the activity drivers are as follows: Cost $1,500,000 7. Design (Engineering Hours) Machining (Machine Hours) Required: 6. 8. Inspection (Batches) $5,000,000 $300,000 Calculate the activity rate for Design. Calculate the activity rate for Machining. Calculate the activity rate for Inspection. Usage by Product A Usage by Product B 400 600 2,000 90 6,000 30 11. 12. Determine the Gross Profit Dollars & Gross Profit Percentage per unit and in total for Product A Determine the Gross Profit Dollars & Gross Profit Percentage per unit and in total for Product B. 13. The President of Kate is skeptical about whether the benefits of ABC will be worth the cost. She notes that ABC is just a different way of "spreading the same total of cost around", so overall company profitability will remain the same under either method. Do you agree with this view? Why or why not? Kate Systems produces two different products. Below is the data related to the company's two products: Product A Product B 1,000 $ 500 $ 200 $ Sales Price per unit $ Direct Materials per unit $ Direct Labor per unit Number of Units $ 10,000 2,000 750 350 7,500 Part A (Traditional Costing-Plantwide rate) Kate currently uses a normal job order costing system with estimated total manufacturing overhead of $6,800,000 applied to the two products on the basis of machine hours. Total machine hours estimated to be 8,000. 1. Compute the current overhead rate. 6,800,000/8,000-850 2. Determine the indirect costs (MOH) applied to Product A if Product A uses 2,000 machine hours. Calculate the total MOH applied and MOH applied per unit for Product A. 850*2000=1,700,000. 1,700,000/10,000=170 3. Determine the indirect costs (MOH) applied to Product B if Product B uses 6,000 machine hours. Calculate the total MOH applied and MOH applied per unit for Product B. 4. Determine the Gross Profit Dollars & Gross Profit Percentage per unit and in total for Product A 5. Determine the Gross Profit $ & Gross Profit % per unit and in total for Product B Kate is considering implementing an ABC system and determined the determined the following are the three primary activities: Design, which uses Engineering Hours as an activity driver; Machining, which uses machine hours as an activity driver; and Inspection, which uses number of batches as an activity driver. The cost of each activity and usage of the activity drivers are as follows: Cost $1,500,000 7. Design (Engineering Hours) Machining (Machine Hours) Required: 6. 8. Inspection (Batches) $5,000,000 $300,000 Calculate the activity rate for Design. Calculate the activity rate for Machining. Calculate the activity rate for Inspection. Usage by Product A Usage by Product B 400 600 2,000 90 6,000 30 11. 12. Determine the Gross Profit Dollars & Gross Profit Percentage per unit and in total for Product A Determine the Gross Profit Dollars & Gross Profit Percentage per unit and in total for Product B. 13. The President of Kate is skeptical about whether the benefits of ABC will be worth the cost. She notes that ABC is just a different way of "spreading the same total of cost around", so overall company profitability will remain the same under either method. Do you agree with this view? Why or why not?
Expert Answer:
Answer rating: 100% (QA)
Part A 1 Compute the current overhead rate Current overhead rate Estimated total manufacturing overhead Estimated total machine hours Current overhead rate 6800000 8000 machine hours Current overhead ... View the full answer
Related Book For
Cost Management A Strategic Emphasis
ISBN: 978-0078025532
6th edition
Authors: Edward Blocher, David Stout, Paul Juras, Gary Cokins
Posted Date:
Students also viewed these accounting questions
-
Pride and Shine is a car wash located in Cowhead, NL and has a December 31 year end. Pride charges $11 for each car it washes, and it costs them $4.25 on average to wash a car. In 2020 Pride washed...
-
A, B and C are the members of BD. In the first year of their term, C goes bankrupt. What are the legal effects of this bankruptcy? What shall A and B do? In a stock corporation due to economic...
-
a firm that wishes to minimize risk when investing idle cashwould be least likely to buy 1. commercial paper 2 long-term corporate bonds c. certifictes of deposit d. treasury bills of the U.S....
-
Hanley asks his assistant to collect details on those costs included in the $21,000 indirect-cost pool that can be traced to each individual job. After analysis, Wigan is able to reclassify $14,000...
-
Suppose that five normal populations have common variance 2 = 100 and means 1 = 175, 2 = 190, 3 = 160, 4 =200, and 5 = 215. How many observations per population must be taken so that the probability...
-
Whiteside Corporation issues $500,000 of 9% bonds, due in 10 years, with interest payable semiannually. At the time of issue, the market rate for such bonds is 10%. Compute the issue price of the...
-
What ethical standards paralegals must follow?
-
A machine is purchased January 1 at a cost of $77,000. It is expected to serve for eight years and have a salvage value of $5,000. REQUIRED Prepare a schedule showing depreciation for each year and...
-
Compute the following: a. From a group of 5 finalists, three will be selected for prizes: gold medal for first place, silver medal for second place, and bronze medal for third place. In how many...
-
Maben Company was started on January 1, Year 1, and experienced the following events during its first year of operation: 1. Acquired $30,000 cash from the issue of common stock. 2. Borrowed $40,000...
-
1. What are the service management characteristics of the CSR job? 2. Define the mission statement and strategy of the Help Desk. Why is the Help Desk important? Who are its customers? 3. How would...
-
How do advancements in technology and automation affect organizational structure, employee roles, and overall workplace dynamics?
-
Pharoah Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken. Corporate records disclose the following. Inventory (beginning) $81,300 Sales...
-
How does work-life balance influence organizational productivity and employee well-being, and what are the most effective practices for fostering a healthy balance ?
-
How does the phosphorylation state of key signal transduction proteins affect cellular responses to extracellular stimuli, and what are the implications for diseases characterized by dysregulated...
-
How do emergent organizational structures, such as holacracy or self-managing teams, impact traditional hierarchical power dynamics and facilitate innovation ?
-
What is the concept of "classical conditioning" and how does it relate to behaviorism and learning?
-
Use this circle graph to answer following Exercises. 1. What fraction of areas maintained by the National Park Service are designated as National Recreation Areas? 2. What fraction of areas...
-
In recent years, due to the effects of the Great Recession of 2007-2009 on the construction industry, a decline in demand for paper products, and increased demand for reduced carbon emissions to...
-
Kristin Helmud is the general manager of Highland Inn, a local mid-priced hotel with 100 rooms. Her job objectives include providing resourceful and friendly service to the hotel's guests,...
-
Heather Smith Cosmetics (HSC) manufactures a variety of products and is organized into three divisions: soap products, skin lotions, and hair products. Information about the most recent year's...
-
Of all the registered automobiles in Colorado, 8% fail the state emissions test. Twelve automobiles are selected at random to undergo an emissions test. a. Find the probability that exactly three of...
-
In Exercises 2732, determine whether the table represents a discrete probability distribution. If not, explain why not. x P(x) -4 0.35 -1 0.25 0 0.15 2 0.25
-
The Centers for Disease Control and Prevention reports that 25% of baby boys 68 months old in the United States weigh more than 20 pounds. A sample of 16 babies is studied. a. What is the probability...
Study smarter with the SolutionInn App