Kimberly works for a company that makes and sells vases, and she just completed the preliminary...
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Kimberly works for a company that makes and sells vases, and she just completed the preliminary gross margin analysis related to the recently completed fiscal year. She followed past practice and allocated MOH costs using a plant-wide rate based on DL hours. The company makes two varieties of vases: Sturdy and Delicate. Kimberly wasn't convinced that using a single plant-wide rate was the best way to go. So she divided the company's MOH costs into three categories according to common descriptions noted in the accounting system: molding (driven by DL hours), polishing (driven by machine hours), and packaging (driven by packaging hours). She gathered the following information to assist in her analysis. Sturdy Delicate Sales revenue $110,000 $68,750 Direct material costs $21,200 $5,600 Direct labor costs $11,900 $11,900 Units produced 2,000 1,250 Direct labor hours 1,000 1,000 Machine hours 2,000 3,300 Packaging hours 1,000 1,800 Activity Total Cost Molding $7,600 Polishing 24,380 Packaging 9,240 (a) Calculate the single plant-wide rate that Kimberly must have calculated and then allocate MOH costs to the two products using that rate. (Round plant-wide rate to 2 decimal places, e.g. 15.25.) Plant-wide rate $ /DL hour Sturdy Delicate Applied MOH $ $ Determine the total product cost per unit for each type of vase under this approach. (Round answers to 2 decimal places, e.g. 15.25.) Sturdy Delicate Product cost/unit $ Kimberly works for a company that makes and sells vases, and she just completed the preliminary gross margin analysis related to the recently completed fiscal year. She followed past practice and allocated MOH costs using a plant-wide rate based on DL hours. The company makes two varieties of vases: Sturdy and Delicate. Kimberly wasn't convinced that using a single plant-wide rate was the best way to go. So she divided the company's MOH costs into three categories according to common descriptions noted in the accounting system: molding (driven by DL hours), polishing (driven by machine hours), and packaging (driven by packaging hours). She gathered the following information to assist in her analysis. Sturdy Delicate Sales revenue $110,000 $68,750 Direct material costs $21,200 $5,600 Direct labor costs $11,900 $11,900 Units produced 2,000 1,250 Direct labor hours 1,000 1,000 Machine hours 2,000 3,300 Packaging hours 1,000 1,800 Activity Total Cost Molding $7,600 Polishing 24,380 Packaging 9,240 (a) Calculate the single plant-wide rate that Kimberly must have calculated and then allocate MOH costs to the two products using that rate. (Round plant-wide rate to 2 decimal places, e.g. 15.25.) Plant-wide rate $ /DL hour Sturdy Delicate Applied MOH $ $ Determine the total product cost per unit for each type of vase under this approach. (Round answers to 2 decimal places, e.g. 15.25.) Sturdy Delicate Product cost/unit $
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Auditing and Assurance Services Understanding the Integrated Audit
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