4.43 - 4.43(60 min Limitations of traditional costing...

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Limitations of traditional costing methods a. Cannonball Corporation Income Statement Aerolight Summit Spinner Total Sales $380,000 $560,000 $475,000 $1,415,000 Direct costs: Direct Materials 150,000 240,000 200,000 590,000 Direct Labor 14,400 24,000 54,000 92,400 Variable overhead 59,048 a 70,857 118,095 248,000 Contribution margin $156,552 $225,143 $ 102,905 484,600 Fixed overhead: Plant admin. 88,000 Other 140,000 Gross profit $ 256,600 _______________ a $59,048 = (10,000 machine hours ÷ 42,000 total machine hours) x $248,000 total variable overhead. $248,000 total variable overhead is the sum of the costs of machine setups through shipping. b. Cannonball Corporation Income Statement Aerolight Summit Spinner Total Sales $380,000 $560,000 $475,000 $1,415,000 Direct costs: Direct Materials 150,000 240,000 200,000 590,000 Direct Labor 14,400 24,000 54,000 92,400 Variable overhead: Machine setups 5,500 a 8,500 12,000 26,000 Order processing 16,000 b 24,000 24,000 64,000 Warehousing
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This note was uploaded on 11/25/2010 for the course ACCT 33010 taught by Professor Staff during the Spring '08 term at Kent State.

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4.43 - 4.43(60 min Limitations of traditional costing...

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