costacctg13_sm_ch05

8 403 of total costs of the retail product line design

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 000 $1,133,000 *(900,000 ÷ 250) + (100,000 ÷ 400) = 3,600 + 250 = 3,850 **(900,000 ÷ 25) + (100,000 ÷ 100) = 36,000 + 1,000 = 37,000 3. Retail Potato Cuts Institutional Potato Cuts Direct costs Direct materials $135,000 $15,000 Packaging 180,000 $ 315,000 8,000 $23,000 Indirect costs Cleaning $0.10 × 90% × 1,200,000 108,000 $0.10 × 10% × 1,200,000 12,000 Cutting $60 × 3,600 hours 216,000 $60 × 250 hours 15,000 Packaging $12 × 36,000; $12 × 1,000 432,000 756,000 12,000 39,000 Total costs $1,071,000 $62,000 Pounds produced 900,000 100,000 Costs per pound $ 1.19 $ 0.62 Note: The total costs of $1,133,000 ($1,071,000 + $62,000) are the same as those in Requirement 1. 5­18 4. There is much evidence of product­cost cross­subsidizat ion. Cost per Pound Simple costing system ABC system Retail $1.133 $1.190 Institutional $1.133 $0.620 Assuming the ABC numbers are more accurate, potato cuts sold to the retail market are undercosted while potatocuts sold to the inst itutional market are overcosted. The simple costing system assumes each product uses all the activit y areas in...
View Full Document

This note was uploaded on 10/11/2010 for the course ACCT 321 taught by Professor Cole during the Spring '10 term at University of Miami.

Ask a homework question - tutors are online