Vernon Boards produces two kinds of skateboards. Selected unit data for the two
ID: 2330740 • Letter: V
Question
Vernon Boards produces two kinds of skateboards. Selected unit data for the two boards for the last quarter follow:
Vernon allocates production overhead using activity-based costing. It allocates delivery expense and sales commissions, which amount to $62,500 per quarter, to the two products equally.
Required
a. Compute the per-unit cost for each product. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
I know the answers are 78.73 and 118.42
b. Compute the profit for each product.
Please walk me through how to get the answer for part b.
Thank you!
Basco Boards Shimano Boards Production costs Direct materials $ 25.70 $ 39.40 Direct labor $ 31.70 $ 54.40 Allocated overhead $ 15.85 $ 21.40 Total units produced and sold 5,700 9,700 Total sales revenue $ 527,250 $ 1,328,900Explanation / Answer
1.Compute per unit cost for each product
Basco Boards
Shimano Boards
Production costs:
Direct materials
$ 25.70
$ 39.40
Direct labor
$ 31.70
$ 54.40
Allocated production overhead
$ 15.85
$ 21.40
Allocated delivery expenses and sales commissions
$ 5.48
($31250/5700units)
$ 3.22
($31250/9700units)
Total Cost per unit
$ 78.73
$ 118.42
2.Compute profit for each product
Basco Boards
Shimano Boards
a)Total Sales revenue
$ 527,250
$ 1,328,900
b)Total Cost per unit
$ 78.73
$ 118.42
c)No. of units
5700 units
9700 units
d)Total product cost(b*c)
$ 448,761
$ 1,148,674
e)Profit (a-d)
$ 78,489
$ 180,226
Basco Boards
Shimano Boards
Production costs:
Direct materials
$ 25.70
$ 39.40
Direct labor
$ 31.70
$ 54.40
Allocated production overhead
$ 15.85
$ 21.40
Allocated delivery expenses and sales commissions
$ 5.48
($31250/5700units)
$ 3.22
($31250/9700units)
Total Cost per unit
$ 78.73
$ 118.42
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