PLEASE HELP ME!!!!! Eaton Company manufactures wheel rims. The company produces
ID: 2399210 • Letter: P
Question
PLEASE HELP ME!!!!!
Eaton Company manufactures wheel rims. The company produces two wheel rim models: standard and deluxe. For 2019, Eaton's managers have In addition to the unit indirect manufacturing costs, the following data are expected for the company's standard and deluxe models for 2019 decided to use the same indirect manufacturing costs per wheel rim that they computed in 2018 using acivity-based costing. ?(Cick the icon to view the 2018 indirect manufacturing costs per wheel rim.) ?(Click the icon to view the expected informaton.) Because of limited machine hour capacity, Eaton can produce othor 2,000 standard rims or 2,000 deluxe rims. Read the reguirements Requirement 1. ? Eaton's managers rely on the ABC unit oost data computed in 2018, which model will they produce? Carry each cost to the nearestcent Ignore seling and administrative expenses for this calculation. Use the ABC unit cost data to compute the gross proit per unit for each model. Data Table ABC Data Gross Profits Standard Deluxe Standard Deluxe Sales price Direct matorials Direct labor Indirect manufacturing costs Gross profit per unit Eaton's managers will produce 2000 units of the | ? model to maximize income. Requirement 2. If the managers rely on the singie plantwide overhead allocation rate cost data, which model will they produce? Use the single plantwide allocation rate cost data to compute the gross profit per unit for each model (Round amounts to the nearest cent, Sx.xx Sales price Direct materials Direct labor $ 900.00 $1,040.00 34.00 51.00 48.00 54.00 Print Done Data Table Single-Allocation-Base Data Gross Profits Standard Deluxe Sales price Direct materials Direct labor Indirect manufacturing costs Gross profit per unit lfthey rely on the sngle plant ide alocation rate oost data, Eaton's managers wil produce the | Requirement 3. Which course of action will yield more income for Eaton? Eaton will earn more inoomo by producing the model Indirect Manufacturing Cost Por Unit Standard Deluxe ABC costs 195.20$ 323.20 Single-rate costs 207.36 S 311.0 Print Done ?I model. It will appear to maxmze income. data are generally more accurate than ?| data.Explanation / Answer
Answers
ABC Data Gross Profits
Working
Standard
Delux
A
Sales Price
$ 900.00
$ 1,040.00
B
Direct Materials
$ 34.00
$ 51.00
C
Direct Labor
$ 48.00
$ 54.00
D as per data
Indirect Manufacturing costs
$ 195.20
$ 323.20
E = A -B - C - D
Gross Profit per unit
$ 622.80
$ 611.80
Eaton's manager will produce 2000 units of the
Standard
Model to maximise income
Single Allocation Base data Gross Profits
Working
Standard
Delux
A
Sales Price
$ 900.00
$ 1,040.00
B
Direct Materials
$ 34.00
$ 51.00
C
Direct Labor
$ 48.00
$ 54.00
D as per data
Indirect Manufacturing costs
$ 207.36
$ 311.04
E = A -B - C - D
Gross Profit per unit
$ 610.64
$ 623.96
Eaton's manager will produce
Delux
Model to maximise income
Eaton will earn more Income by producing
Standard
Model
ABC method
data are generally more accurate than
Plant-vide Single Rate method data.
ABC Data Gross Profits
Working
Standard
Delux
A
Sales Price
$ 900.00
$ 1,040.00
B
Direct Materials
$ 34.00
$ 51.00
C
Direct Labor
$ 48.00
$ 54.00
D as per data
Indirect Manufacturing costs
$ 195.20
$ 323.20
E = A -B - C - D
Gross Profit per unit
$ 622.80
$ 611.80
Eaton's manager will produce 2000 units of the
Standard
Model to maximise income
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