p4-2a - Name: Date: Instructor: Course: rd Managerial...

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FileName: 88fcc8396e746ba77b7935780922cb96f639a546.xls, Tab: Problem P4-2A, Page 1 of 2, 12/28/2011, 19:02:00 Name: Date: Instructor: Course: $1,600 and a new model, the Majestic, which sells for $1,300 The production cost computed per unit under traditional costing for each model is 2005 was as follows. Traditional Costing Royale Majestic Direct materials $700 $420 Direct labor($20 per hour) 120 100 Mfg overhead ($38 per DLH) 228 190 Total per unit cost $1,048 $710 In 2005, Jacobson manufactured 25,000 units of the Royale and 10,000 units of the Majestic. The overhead rate of $38 per direct labor hour was determined by dividing total expected manufacturing overhead of $7,600,000 by the direct labor hours 200,000 for the two models. Under traditional costing, the gross profit on the models was: Royale $552 or ($1,600 - $1,048) and Majestic $590 or ($1,300 - $710) Because of this difference, management is considering phasing out the Royale model and increasing the Majestic model. Activity Cost Driver Purchasing Number of orders $1,200,000 40,000 $30 Machine setups Number of setups 900,000 18,000 50 Machining Machine hours 4,800,000 120,000 40 Quality control Number of inspections 700,000 28,000 25 The cost drivers used for each product were:
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This note was uploaded on 12/28/2011 for the course ACCT 221 taught by Professor Leonarda.bacon during the Winter '07 term at CSU Bakersfield.

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p4-2a - Name: Date: Instructor: Course: rd Managerial...

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