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ng process. at EA has two departments. Department A-101 was epartment A-102 is new, with state-of-the-art equip product. n presents financial results for the two models from

ng process. at EA has two departments. Department A-101 was epartment A-102 is new, with state-of-the-art equip product. n presents financial results for the two models from

FINANCIAL ACCOUNTING
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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Edlie Accessories (EA) makes travel bags, both for sale under their own label ("Branded") and for other resellers to put their label on the bags ("Private-Label"). The bags sold through the two channels are similar, but they differ slightly in the quality of materials and detail in the manufacturing process. The manufacturing plant at EA has two departments. Department A-101 was the original manufacturing facility and many of the machines are original. Department A-102 is new, with state-of-the-art equipment. The new equipment facilitates the additional care taken with the Branded product. The following information presents financial results for the two models from last year: Sales revenue Direct material Direct labor Manufacturing overhead. Department A-101 Private Label Branded Total $ 774,000 $ 504,000 $ 1,278,000 222,000 161,400 150,000 101,400 a. Using plantwide allocation b. Using department allocation Department A-102 Total overhead The product costing system at EA allocates manufacturing overhead on the basis of direct labor costs. 383,400 251,400 $ 207,600 244,920 $ 452,520 Required: a. Compute the profit or loss for each product using plantwide allocation. b. Compute the profit or loss for each product using department allocation... Note: For all requirements, loss amounts should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers rounded to the nearest whole number. Profit or Loss Private Label Branded
Transcribed Image Text:Edlie Accessories (EA) makes travel bags, both for sale under their own label ("Branded") and for other resellers to put their label on the bags ("Private-Label"). The bags sold through the two channels are similar, but they differ slightly in the quality of materials and detail in the manufacturing process. The manufacturing plant at EA has two departments. Department A-101 was the original manufacturing facility and many of the machines are original. Department A-102 is new, with state-of-the-art equipment. The new equipment facilitates the additional care taken with the Branded product. The following information presents financial results for the two models from last year: Sales revenue Direct material Direct labor Manufacturing overhead. Department A-101 Private Label Branded Total $ 774,000 $ 504,000 $ 1,278,000 222,000 161,400 150,000 101,400 a. Using plantwide allocation b. Using department allocation Department A-102 Total overhead The product costing system at EA allocates manufacturing overhead on the basis of direct labor costs. 383,400 251,400 $ 207,600 244,920 $ 452,520 Required: a. Compute the profit or loss for each product using plantwide allocation. b. Compute the profit or loss for each product using department allocation... Note: For all requirements, loss amounts should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers rounded to the nearest whole number. Profit or Loss Private Label Branded
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