Ace produces 2 models of mobiles: A as well as B. The association has 5 categories of beyond costs totalling $4,150,000.
Machine doing 47.5%
Purchasing 20%
Receiving 15%
Handling 10%
Shipping 7.5%
Current genius is 200,000 appurtenance hrs, as well as the stream prolongation uses 100% of accessible hrs. The sales brew is 45% A as well as 55% B. Overhead costs have been practical to any indication formed upon appurtenance hrs. Production costs as well as alternative info follows
________________A_____B
Direct materials per section $8000____$6500
Direct work per unit____$1900____$1750
Applied beyond _______?________?
# of units produced_____450______550
# of purchases _________5_______4
# of shipments rec’d _____3_______3
% of appurtenance hrs used up by any product______________47%_…
# of moves in doing ___75_____ 100
# of kilo to ship________4100____ 4250
Ace would similar to to sell any Regular indication for the markup of 15%. Use an activity-based proceed to establish the suitable offered price. Show all ancillary calc
{ 1 comment… read it below or add one }
the numbers are ugly as they’re not in even round numbers.
Machine operating 47.5%=1,971,250.00
Purchasing 20%=830,000.00
Receiving 15%=622,500.00
Handling 10%=415,000.00
Shipping 7.5%=311,250.00
Because they’re going to use ABC to allocate the cost, the statement “Overhead costs are applied to each model based on machine hrs” is irrelevant. Instead, the OH needs to allocated based on each activity.
# of purchases _________5_______4 461,111.11 and 368,888.89
# of shipments rec’d _____3_______3 311,250.00 and 311,250.00
% of machine hrs consumed by each product___________47%_53% 926,487.50 and 1,044,762.50
# of moves in handling ___75_____ 100 177,857.14 and 237,142.86
# of kilo to ship________4100____ 4250 152,829.34 and 158,420.66
Total OH cost for A = 2,029,535.10
and B = 2,120,464.90
OH cost/ unit (divide by units produced for each product), A = 4,510.08, B = 3,855.39
TC/ unit A = 14,410.08, B = 12,105.39
Selling price A = 16,571.59, B = 13,921.20