CH 9 HW.xlsx - Munoz Sporting Equipment manufactures...

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Baseball BatsTennis RacketsSales revenue\$1,530,000\$975,000Direct labor\$320,000\$160,000Direct materials\$559,000\$282,000a. Compute the profit for each product using plantwide allocation.Munoz Sporting Equipment manufactures baseball bats and tennis rackets. Department Bproduces the baseball bats, and Department T produces the tennis rackets. Munozcurrently uses plantwide allocation to allocate its overhead to all products. Direct laborcost is the allocation base. The rate used is 200 percent of direct labor cost. Last year,revenue, materials, and direct labor were as follows:b. Maria, the manager of Department T, was convinced that tennis rackets were reallymore profitable than baseball bats. She asked her colleague in accounting to break downthe overhead costs for the two departments. She discovered that had department ratesbeen used, Department B would have had a rate of 150 percent of direct labor cost andDepartment T would have had a rate of 300 percent of direct labor cost. Recompute theprofits for each product using each department’s allocation rate (based on direct laborcost).
Dept BDept TSales Rev\$1,530,000\$975,000Labor\$320,000\$160,000Materials\$559,000\$282,000Applied MO\$640,000\$320,000Total Cost\$1,519,000\$762,000Profit\$11,000\$213,000Dept T\$975,000\$160,000\$282,000\$480,000\$922,000\$53,000
Activities (and cost drivers)Afternoon PicnicFormal DinnerAdvertising (parties)\$83 per party\$83 per partyPlanning (parties)\$96 per party\$106 per partyRenting equipment\$57 per party plus\$78 per party plus(parties, guests)\$14 per guest\$23 per guestObtaining insurance (parties)\$235 per party\$430 per partyServing (parties, servers)\$50 per server per party\$70 per server per partyPreparing food (guests)\$22 per guest\$32 per guestPer party costs do not vary with the number of guests.a. Compute the cost of a 20-guest afternoon picnic.

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