Allocation of Overheads Edge Manufacturing produces two types of entry doors: De

Question

Allocation of Overheads Edge Manufacturing produces two types of entry doors: Deluxe and Standard. The assignment basis for support costs has been direct labor dollars. For 2009, Edge Manufacturing compiled the following data for the two products Sales units Sales price per unit Direct material and labor costs per $180.00 $130.00 $50,000 $400,000 $650.00$475.00 unit Manufacturing support costs per unit $80.00$120.00 Last year, Edge Manufacturing purchased an expensive robotics system to allow for more decorative door products in the deluxe product line. The CFO suggested that an ABC analysis could be valuable to help evaluate a product mix and promotion strategy for the next sales campaign She obtained the following ABC information for 20X5 Driv # of setups 1V1 Cost Total Deluxe Standard 400 100 Setups Machine-| # of machine | $44,000,000 | 600,000 | 300,000 | 300,000 related hours Packing # of shipments | $ 5,000,000 | 250,000 | 50,000 | 200,000 N.B. : #-number 500,000 500

Explanation / Answer

1 ABC Total cost Total cost driver Cost per driver Setups 500000 500 1000 Machine related 44000000 600000 73.33 Packing 5000000 250000 20.00 Total overhead cost 49500000 2 Deluxe Cost per driver Standard Setups 400000 1000 100000 500000 Machine related 22000000 73.33 22000000 44000000 Packing 1000000 20.00 4000000 5000000 Total cost 23000000 26000000 Number of units 50000 400000 Overhead cost per unit 460.00 65.00 3 Deluxe Standard Material and direct labor per unit 180 130 Manufacturing cost per unit 80 120 Overhead cost per unit 460 65 Total cost 720 315

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.