Munoz Sporting Equipment manufactures baseball bats and tennis rackets. Departme

Question

Munoz Sporting Equipment manufactures baseball bats and tennis rackets. Department B produces the baseball bats, and Department T produces the tennis rackets. Munoz currently uses plant wide allocation to allocate its overhead to all products. Direct labor cost is the allocation base. The rate used is 200 percent of direct labor cost. Last year, revenue, materials, and direct labor were as follows: Compute the profit for each product using plantwide allocation. Maria, the manager of Department T, was convinced that tennis rackets were really more profitable than baseball bats. She asked her colleague in accounting to break down the overhead costs for the two departments. She discovered that had department rates been used, Department B would have had a rate of 150 percent of direct labor cost and Department T would have had a rate of 200 percent of direct labor cost. Recompute the profits for each product using each department's allocation rate (based on direct labor cost).

Explanation / Answer

2)

Baseball Tennis sales 1,640,000 900,000 Less:cost Direct labor 360,000 180,000 Direct material 550,000 284,000 Overhead 720000      [360000*200%] 360,000    [180000*200%] Profit 10000 76000

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

---

---

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