Exercise 7 - Your Co makes 3 products: economy style, standard, and luxury. Show

ID: 2338514 • Letter: E

Question

Exercise 7 - Your Co makes 3 products: economy style, standard, and luxury. Shown below are the estimated costs and estimated production data for next year Customer Service Engineering Storage Packaging Purchasing Setup Supervision Total Estimated overhead $150,000 Customer $300,000 Number of changes $25,000Square fe $35,000Number of units $100,000Number of orders $125,000 Number of setups $120,000 Number of employees $855,000 Economyy Customers Number of Changes Square feet used Number of units Number of orders Number of setups Number of employees 100 20 1,500 10,000 50 250 Standard 150 30 2,500 20,000 80 500 Luxury 50 50 1,000 5,000 30 250 $600,000 $180,000 $200,000 Standard $2,125,000 $400,000 $375,000 Luxury $575,000 $150,000 $175,000 Sales Direct materials costs Direct labor costs Calculate ABC rates for each cost pool a)lCustomer Service b) Engineering c)|Storage d) Packagin e) Purchasing f) |Setu g) Supervision $500.00per customer $3,000.00 per change $5.00 $1.00 per sq. ft. per unit 625.00per order $125.00 per setup $20,000.00per employee

Explanation / Answer

Answer

Working

Prod A

Prod B

Prod C

A [calculated by you in 'r']

Single Plant Wide overhead rate per DL $

$ 1.14

B [given]

Amount of $ Direct Labor cost

$ 200,000.00

$ 375,000.00

$ 175,000.00

C = A x B

Total Overhead assigned ( 's' )

$ 228,000.00

$ 427,500.00

$ 199,500.00

D [given]

Direct Material costs

$ 180,000.00

$ 400,000.00

$ 150,000.00

E = B+C+D

Total Cost ( 't')

$ 608,000.00

$ 1,202,500.00

$ 524,500.00

F [given]

Sales

$ 600,000.00

$ 2,125,000.00

$ 575,000.00

G = F - E

Net Profit ( 'u' )

$ (8,000.00)

$ 922,500.00

$ 50,500.00