MTI makes three types of lawn tractors: M3100, M4100, and M6100. In the past, it allocated overhead to products using machine-hours. Last year, the company produced 8,000 units of M3100, 17,500 units of M4100, and 10,000 units of M6100 and had the following revenues and costs: Sales revenue Direct costs Direct materials Direct labor Variable overhead Setting up machines Processing sales orders. Warehousing Operating machines Shipping Contribution margin Plant administration Gross profit MTI Income Statement M3100 Activity Setting up machines Processing sales orders Warehousing Operating machines $ 9,400,000 3,300,000 610,000 M4100 $ 15,700,000 Cost Driver Production runs 4, 800, 800 860,000 M6100 $14,200,000 sales orders received Units held in inventory Machine-hours 3, 100, 000 1,730,000 MTI's controller has heard about activity-based costing and puts together an employee team to recommend cost allocation bases. The employee team recommends the following. M3100 9 170 90 6, 200 Total $ 39,300,000 M4100 18 390 180 9,900 11, 200,000 3,200,000 2,352,000 1,794, 000 2, 204,000 1, 175,000 994, 900 $ 16, 381, 080 6,400,000 $ 9,981, 000 M6100 21 220 110 8,900

MTI makes three types of lawn tractors: M3100, M4100, and M6100. In the past, it allocated overhead to products using machine-hours. Last year, the company produced 8,000 units of M3100, 17,500 units of M4100, and 10,000 units of M6100 and had the following revenues and costs: Sales revenue Direct costs Direct materials Direct labor Variable overhead Setting up machines Processing sales orders. Warehousing Operating machines Shipping Contribution margin Plant administration Gross profit MTI Income Statement M3100 Activity Setting up machines Processing sales orders Warehousing Operating machines $ 9,400,000 3,300,000 610,000 M4100 $ 15,700,000 Cost Driver Production runs 4, 800, 800 860,000 M6100 $14,200,000 sales orders received Units held in inventory Machine-hours 3, 100, 000 1,730,000 MTI's controller has heard about activity-based costing and puts together an employee team to recommend cost allocation bases. The employee team recommends the following. M3100 9 170 90 6, 200 Total $ 39,300,000 M4100 18 390 180 9,900 11, 200,000 3,200,000 2,352,000 1,794, 000 2, 204,000 1, 175,000 994, 900 $ 16, 381, 080 6,400,000 $ 9,981, 000 M6100 21 220 110 8,900

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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