Question: Need to do activity based costing based off these figures John Sticks - the new CEO found that the company was using a cost-plus pricing

 Need to do activity based costing based off these figures John

Need to do activity based costing based off these figures

John Sticks - the new CEO found that the company was using a cost-plus pricing system adding a 50% mark up to the manufacturing costs of both the commercial and domestic sunshade stands to arrive at the sales price. The costing of the sunshade stands was based on the following information: Commercial Domestic Units produced and sold 1.000 10,000 Sales Price (Average) $27,750 $1,500 Total Per unit Total Per unit Direct Materials $6,000,000 $6,000 $2,000,000 $200 Direct Manufacturing Labour $2,000,000 $2,000 $1,500,000 $150 Machine Costs $2,000,000 $2,000 $1,000,000 $100 Total Direct Costs $10,000,000 $10,000 $4,500,000 $450 Manufacturing Overhead Costs $8,500,000 $8,500 $5,500,000 $550 Total Cost of Goods Sold $18,500,000 $18,500 $10,000,000 $1,000 *Manufacturing overhead costs were allocated per machine hour, the commercial units used 1.7 machine hour per unit and the domestic used 6.6 (approx.) minutes per unit. John began his tenure at the company by closely examining the manufacturing process. The process required for making sunshade stands substantially differed between the domestic and commercial sunshade stands. In addition, sunshade stands for commercial use were manufactured in very small batches to assure uniform quality from one product to the next. On further investigation of the production process, John was able to identify the following activities and their related costs that were used in producing the two different products. Units of the Cost Allocation Base Commercial Domestic 40,000 20 Activity Cost Allocation Base Soldering number of solder points Shipments number of shipments Quality control number of inspections Purchase orders number of orders Machine power machine hours Machine setups number of setups Total manufacturing overhead Total Activity Costs $4,000,000 $1,800,000 $2,200,000 $1,400,000 $3,000,000 $1,600,000 $14,000,000 100 15,000 1,000 1,000 1,000 1,700 1,000 1,100 100

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