1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
fiasKO [112]
2 years ago
11

Schultz Electronics manufactures two ultra high-definition television models: the Royale which sells for $1,580, and a new model

, the Majestic, which sells for $1,270. The production cost computed per unit under traditional costing for each model in 2020 was as follows.
Traditional Costing Royale Majestic
Direct materials $650 $420
Direct labor ($20 per hour) 120 100
Manufacturing overhead ($42 per DLH) 252 210
Total per unit cost $1,022 $730

In 2017, Schultz manufactured 25,000 units of the Royale and 10,000 units of the Majestic. The overhead rate of $42 per direct labor hour was determined by dividing the total expected manufacturing overhead of $8,449,220 by the total direct labor hours (200,000) for the two models. Under traditional costing, the gross profit on the models was Royale $458 ($1,480 - $1,022) and Majestic $540 ($1,270 - $730). Because of this difference, management is considering phasing out the Royale model and increasing the production of the Majestic model. Before finalizing its decision, management asks Schultz's controller to prepare an analysis using activity-based costing (ABC). The controller accumulates the following information about overhead for the year ended December 31, 2017.


Activity Cost Pools Cost Drivers Estimated Overhead Expected Use of Cost Drivers Activity-Based Overhead Rate
Purchasing Number of orders $1,261,700 40,700 $31/order
Machine setups Number of setups 874,120 16,810 $52/setup
Machining Machine hours 5,440,500 120,900 $45/hour
Quality control Number of inspections 872,900 30,100 $29/inspection

The cost drivers used for each product were:

Cost Drivers Royale Majestic Total
Purchase orders 17,600 23,100 40,700
Machine setups 14,510 2,300 16,810
Machine hours 75,300 45,600 120,900
Inspections 11,900 18,200 30,100
Assign the total 2017 manufacturing overhead costs to the two products using activity-based costing (ABC) and determine the overhead cost per unit. (Round cost per unit to 2 decimal places, e.g. 12.25.)

Required:
Calculate cost per unit of each model using ABC costing.
Business
1 answer:
Sergio [31]2 years ago
6 0

Answer:

Schultz Electronics

                                  Royale      Majestic

Cost per unit cost   $971.35    $841.55

Explanation:

a) Data and Calculations:

Information about overhead for the year ended December 31, 2017.

Activity Cost  Cost Drivers      Estimated       Expected Use   Activity-Based

  Pools                                      Overhead    of Cost Drivers     O/H Rate

Purchasing    No. of orders   $1,261,700            40,700             $31/order

Machine        

setups          No. of setups       874,120              16,810             $52/setup

Machining    Machine hours 5,440,500          120,900             $45/hour

Quality          Number of

control           inspections       872,900            30,100         $29/inspection

Total overhead costs         $8,449,220

The cost drivers used for each product were:

Cost Drivers         Royale         Majestic      Total

Purchase orders  17,600          23,100      40,700

Machine setups    14,510          2,300        16,810

Machine hours    75,300        45,600    120,900

Inspections           11,900         18,200      30,100

Allocation of overhead costs:

Cost Drivers               Royale                         Majestic                    Total

Purchasing     $545,600 (17,600*$31)     $716,100 (23,100 *$31) $1,261,700

Machine setup 754,520 (14,510*$52)       119,600 (2,300*$52)       874,120

Machining     3,388,500 (75,300*$45) 2,052,000 (45,600*$45) 5,440,500

Quality Control 345,100 (11,900*$29)      527,800 (18,200*$29)    872,900

Total            $5,033,720                       $3,415,500                     $8,449,220

Quantity           25,000                              10,000

Overhead per

  unit            $201.35                               $341.55

Cost per unit of each model, using ABC Costing Technique:

                                             Royale       Majestic  

Direct materials                    $650        $420

Direct labor ($20 per hour)    120           100

Manufacturing overhead       201.35      341.55

($42 per DLH)

Total per unit cost               $971.35    $841.55

You might be interested in
Use the following information for the Quick Study below. Skip to question [The following information applies to the questions di
Arada [10]

Answer and Explanation:

a. The computation of the internal rate of return is shown below:

Given that

The expected cash inlfows would be $9,400 for four years each

Rate of return is 7%

The Initial investment is $30,455

Based on the above information

The net present value is

= $9,400 × PVIFA factor for 7% at 4 years - $30,455

= $9,400 × 3.3872 - $30,455

= $31,840 - $30,455

= $1,385

Now the present value factor is

= $30,455 ÷ $9,400

= 3.2399

Now based on the factor table, the rate should be 9% for four years

b. Yes depend upon the internal rate of return, the park co should make the investment

6 0
2 years ago
Saturn Industries purchased and consumed 64,000 gallons of direct material that was used in the production of 17,000 finished un
Nikitich [7]

Answer:

The actual price = $1.08

Explanation:

The standard material price can be worked out as follows:

<em>Step 1: Work out the standard price of material  using the material usage variance</em>

Standard price = Material usage variance/(standard quantity of material - actual quantity)

Standard quantity of material = standard qty per unit × actual production

                                              = 4 × 17,000 =68,000

Standard price =  2,800/(68,000-64,000)= $0.7

<em>Step 2 : Work out the Actual material price using the material price variance</em>

Material price variance = (Standard price - Actual price )× Actual quantity of material

6,400 =  (y - 0.7) ×  17,000

6400 = 17,000y  - 11,900

17,000 y = 6,400 + 11,900

y = 18,300/17,000= 1.08

The actual price = $1.08

5 0
3 years ago
Mountain Bikes, Inc. (MBI), and Nero enter into a contract for a sale of amountain bike. MBI, a merchant who deals in goods of t
elena-s [515]

Answer:

B) making warranties easier to understand.

Explanation:

The Magnuson Moss Warranty Act of 1975 governs consumer product warranties. Manufacturers are not required to offer product warranties, but when they do, they are required to provide clear and detailed information about warranty coverage. This law applies only to products, it doesn't apply to services.

3 0
3 years ago
You recently sold 100 shares of Microsoft stock to your brother at a family reunion. At the reunion your brother gave you a chec
gregori [183]

Answer:

d. This is an example of a direct transfer of capital.

Explanation:

Direct transfer of stocks or securities refers a to situation whereby a seller of securities or stocks sell them to the buyer direct without involving any financial institution. Under this, seller will directly deliver the security certificate to the buyer who will in turn pay the seller in cash or by check immediately.

Therefore, collecting check from your brother for the Microsoft stock and giving your brother the stock certificate is an example of a direct transfer of capital.

3 0
2 years ago
Estimate the cost of expanding a planned new clinic by 25,000 ft2. The appropriate capacity exponent is 0.62, and the budget est
jeka57 [31]

Answer:

cost of expansion  = $1389859.55

Explanation:

Given data:

Original size = 185,000 ft^2

New expansion = 25000 ft^2

capacity component  = 0.62

total cost for original size of clinic is = $17 million

Size of new clinic = 185,000 + 25,000 = 210,000 ft^2

cost of new clinic=  17,000,000 \times [\frac{size\ of\ new\ clinic}{185,000}]^{0.62}

cost of new clinic =17,000,000 \times [\frac{210,000}{185,000}]^{0.62}

cost of new clinic = $18,389,859.56

cost of expansion = cost of 210,000 ft^2  -  cost of 185,000 ft^2

                               = 18,389,859.56- 17,000,000

cost of expansion  = $1389859.55

4 0
3 years ago
Other questions:
  • When a firm changes its capital structure by issuing or retiring debt, for example, this change alters the firms unlevered free
    9·1 answer
  • Why is it important to look at external sources of information when exploring product and service information?
    9·1 answer
  • A higher required reserve ratio​ _________ the value of the simple deposit multiplier.
    14·1 answer
  • If a department that uses process costing starts the reporting period with 100,000 physical units that were 20% complete with re
    7·1 answer
  • Evaluating and rewarding managers based on absorption basis income can lead to overproduction. true or false
    6·1 answer
  • During the preparation of the bank reconciliation for Building Concepts Co., Joel Kimmel, the assistant controller, discovered t
    10·2 answers
  • Suppose Cook Plus manufactures cast iron skillets. One model is a​ 10-inch skillet that sells for $ 24. Cook Plus projects sales
    5·1 answer
  • Suppose the S&amp;P 500 index is currently 950 and the initial margin is 10%. You wish to enter into 10 S&amp;P 500 futures cont
    12·1 answer
  • Good internal controls over the write-off of uncollectible accounts include appropriate review of ________ by management to ensu
    15·1 answer
  • There are many buyers and sellers in the market for trumpets.
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!