selling price of $40 per unit. Additional information relating to the company's only two products is shown below: Product A Product B Total $ 436,300 $ 249,500 $ 200,000 $ 104,000 $ 685,800 304,000 608,000 Direct materials Direct labor Manufacturing overhead $ 1,597,800 Cost of goods sold The company created an activity-based costing system that allocated its manufacturing overhead costs to four activities as follows: Manufacturing Activity Product A Product B Total Activity Cost Pool (and Activity Measure) Machining (machine-hours) Setups (setup hours) Overhead 152,500 375 62,500 $ 213,500 157,500 90,000 75 300 120 000
selling price of $40 per unit. Additional information relating to the company's only two products is shown below: Product A Product B Total $ 436,300 $ 249,500 $ 200,000 $ 104,000 $ 685,800 304,000 608,000 Direct materials Direct labor Manufacturing overhead $ 1,597,800 Cost of goods sold The company created an activity-based costing system that allocated its manufacturing overhead costs to four activities as follows: Manufacturing Activity Product A Product B Total Activity Cost Pool (and Activity Measure) Machining (machine-hours) Setups (setup hours) Overhead 152,500 375 62,500 $ 213,500 157,500 90,000 75 300 120 000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![nabled: Midterm 2 Fall 2021 i
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In its first year of operations a company produced and sold 70,000 units of Product A at a selling price of $20 per unit and 17,500 units of P Bat
a selling price of $40 per unit. Additional information relating to the company's only two products is shown below:
Product A
Product B
Total
Direct materials
$ 436,300
$ 200,000
$ 249,500
$ 104,000
$ 685,800
304,000
608,000
$ 1,597,800
Direct labor
Manufacturing overhead
Cost of goods sold
The company created an activity-based costing system that allocated its manufacturing overhead costs to four activities as follows:
Manufacturing
Activity
Activity Cost Pool (and Activity Measure)
Machining (machine-hours)
Setups (setup hours)
Product design (number of products)
Other (organization-sustaining costs)
Product A
90,000
75
Overhead
Total
Product B
62,500
300
$ 213,500
157,500
120,000
117,000
152,500
375
1
2
NA
NA
NA
Total manufacturing overhead cost
$608,000
The company's ABC implementation team also concluded that $50,000 and $100,000 of the company's advekising expenses could be directly traced
to Product A and Product B, respectively. The remainder of its selling and administrative expenses ($400,000) was organization-sustaining in nature.
If the company uses a traditional cost system that relies on plantwide overhead allocation based on direct labor dollars, what is the total gross margin
(or product margin) earned by Product B?
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Transcribed Image Text:nabled: Midterm 2 Fall 2021 i
Saved
Help
Submit
In its first year of operations a company produced and sold 70,000 units of Product A at a selling price of $20 per unit and 17,500 units of P Bat
a selling price of $40 per unit. Additional information relating to the company's only two products is shown below:
Product A
Product B
Total
Direct materials
$ 436,300
$ 200,000
$ 249,500
$ 104,000
$ 685,800
304,000
608,000
$ 1,597,800
Direct labor
Manufacturing overhead
Cost of goods sold
The company created an activity-based costing system that allocated its manufacturing overhead costs to four activities as follows:
Manufacturing
Activity
Activity Cost Pool (and Activity Measure)
Machining (machine-hours)
Setups (setup hours)
Product design (number of products)
Other (organization-sustaining costs)
Product A
90,000
75
Overhead
Total
Product B
62,500
300
$ 213,500
157,500
120,000
117,000
152,500
375
1
2
NA
NA
NA
Total manufacturing overhead cost
$608,000
The company's ABC implementation team also concluded that $50,000 and $100,000 of the company's advekising expenses could be directly traced
to Product A and Product B, respectively. The remainder of its selling and administrative expenses ($400,000) was organization-sustaining in nature.
If the company uses a traditional cost system that relies on plantwide overhead allocation based on direct labor dollars, what is the total gross margin
(or product margin) earned by Product B?
< Prev
21 of 23
Next >
MacBook Ain
F12
F11
F10
F9
F8
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