costacctg13_sm_ch05

Benzo may betemptedto changethe product cost numbers

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Unformatted text preview: 9 (50 min.) ABC, implementation, ethics. 1. Applewood Electronics should not emphasize the Regal model and should not phase out the Monarch model. Under activit y­based costing, the Regal model has an operating inco me percentage of less than 3%, while the Monarch model has an operating inco me percentage of nearly 43%. Cost driver rates for the various activit ies ident ified in the act ivit y­based costing (ABC) system are as fo llows: Soldering $ 942,000 ¸ 1,570,000 = $ 0.60 per solder point Shipments 860,000 ¸ 20,000 = 43.00 per shipment Qualit y control 1,240,000 ¸ 77,500 = 16.00 per inspection Purchase orders 950,400 ¸ 190,080 = 5.00 per order Machine power 57,600 ¸ 192,000 = 0.30 per machine­hour Machine setups 750,000 ¸ 30,000 = 25.00 per setup Applewood Electronics Calculation of Costs of Each Model under Activity­Based Costing Monarch Direct costs Direct materials ($208 ´ 22,000; $584 ´ 4,000) $ 4,576,000 Direct manufacturing labor ($18 ´ 22,000; $42 ´ 4,000) 396,000 Machine costs ($144 ´ 22,000; $72 ´...
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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.

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