# Machine related of machine hours 44000000 600000

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Chapter 1 / Exercise 29
Finite Mathematics and Applied Calculus
Costenoble/Waner
Expert Verified
Machine-related of machine hours \$44,000,000 600,000 300,000 300,000 Packing of shipments \$ 5,000,000 250,000 50,000 200,000 Required: a. Using the current system, what is the estimated 1. total cost of manufacturing one unit for each type of door? 2. profit per unit for each type of door? b. Using the current system, estimated manufacturing overhead costs per unit are less for the deluxe door (\$80 per unit) than the standard door (\$120 per unit). What is a likely explanation for this? c. Review the machine-related costs above. What is a likely explanation for machine-related costs being so high? What might explain why total machining hours for the deluxe doors (300,000 hours) are the same as for the standard doors (300,000 hours)? d. Using the activity-based costing data presented above, 1. compute the cost-driver rate for each overhead activity.
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Chapter 1 / Exercise 29
Finite Mathematics and Applied Calculus
Costenoble/Waner
Expert Verified
2. compute the revised manufacturing overhead cost per unit for each type of entry door. 3. compute the revised total cost to manufacture one unit of each type of entry door. e. Is the deluxe door as profitable as the original data estimated? Why or why not? f. What considerations need to be examined when determining a sales mix strategy? 161) Brilliant Accents Company manufactures and sells three styles of kitchen faucets: Brass, Chrome, and White. Production takes 25, 25, and 10 machine hours to manufacture 1,000-unit batches of brass, chrome, and white faucets, respectively. The following additional data apply: BRASS CHROME WHITE Projected sales in units 30,000 50,000 40,000 PER UNIT data: Selling price \$40 \$20 \$30 Direct materials \$ 8 \$ 4 \$ 8 Direct labor \$15 \$ 3 \$ 9 Overhead cost based on direct labor hours (traditional system) \$12 \$ 3 \$ 9 Hours per 1000-unit batch: Direct labor hours 40 10 30 Machine hours25 25 10 Setup hours 1.0 0.5 1.0 Inspection hours 30 20 20 Total overhead costs and activity levels for the year are estimated as follows: Activity Overhead costs Activity levels Direct labor hours 2,900 hours Machine hours2,400 hours Setups \$465,500 95 setup hours Inspections \$405,000 2,700 inspection hours \$870,500 Required: a. Using the traditional system, determine the operating profit per unit for the brass style of faucet. b. Determine the activity-cost-driver rate for setup costs and inspection costs.
c. Using the ABC system, for the brass style of faucet: 1. compute the estimated overhead costs per unit. 2. compute the estimated operating profit per unit. d. Explain the difference between the profits obtained from the traditional system and the ABC system. Which system provides a better estimate of profitability? Why? 162) Brilliant Accents Company manufactures and sells three styles of kitchen faucets: Brass, Chrome, and White. Production takes 25, 25, and 10 machine hours to manufacture 1000-unit batches of brass, chrome and white faucets, respectively. The following additional data apply: BRASS CHROME WHITE Projected sales in units 30,000 50,000 40,000 PER UNIT data: Selling price \$40 \$20 \$30 Direct materials \$ 8 \$ 4 \$ 8 Direct labor \$15 \$ 3 \$ 9 Overhead cost based on direct labor hours (traditional system) \$12 \$ 3 \$ 9 Hours per 1000-unit batch: Direct labor hours 40 10 30 Machine hours25 25 10 Setup hours 1.0 0.5 1.0 Inspection hours 30 20 20 Total overhead costs and activity levels for the year are estimated as follows: Activity Overhead costs Activity levels Direct labor hours 2,900 hours