cts 10.36 Volume and ABC allocatiens Your answer is partially correct. Try again
ID: 2565576 • Letter: C
Question
cts 10.36 Volume and ABC allocatiens Your answer is partially correct. Try again. of wild animasis and nature, Sonja Regostraprints of select photographs over the prints of select photographs over the Internet. Regardless of the picture bought, she offers buyers a choice in framing: a plain black frame or a fancy frame with a certificate of authenticity Based on initial cost estimates, Sonja believes the Deluxe frames frames sold has increased. She has asked for your help in figuring out what she might be doing wrong. She provides the following data: to be more profitable than the Standard frames. However, her profits have slipped every quarter even as the proportion of Deluxe Units/year Price per unit Materials (s/unit) Labor (S/unit) Standayd ,000 $210 65 50 1,000 $350 75 She further informs us that her total overhead is $390,000 per year Required a. Calculate the profit per unit for the Deluxe and Standard prints, if Sonja allocates overhead using laber dollars as the allecation basis. e's profit per unit s profit per unit b. You find that only $156,000 of Sonja's overhead costs relates directly to labor. Of the remaining overhead costs, $136,500 corresponds to batch-level activities and $58,500 to preduct-level The remaining overhead costs are facility level costs related to the rent on her studio, hosting the Web site, and other such business-sustaining actions. Compliete the following income statement for Sonja, dlearly highlighting the allocation from each cost pool. (Round Profit/unit answers to I decimal place, e.g.52)Explanation / Answer
Over head allocation to products:
Labor related OH:
It is allocated based on labor costs of products
Labor cost of Deluxe= 75*1000= 75000
Labor cost of Standard= 50*5000= 250000
Total labor cost= 75000+250000= 325000
Labor OH of Deluxe= 75000/325000 *156000= 36000
Labor OH of standard= 250000/325000 *156000= 120000
Labor OH of Deluxe= 75000/325000 *156000= 36000
Batch level OH allocation:
Total batches:
Deluxe= Total units produced/ units per batch= 1000/50= 20
Standard= 5000/250= 20
Total batches= 40
OH per batch= Total batch related OH/ Total batches= 136500/40= 3412.5 per batch
Deluxed related OH= 3412.5*20= 68250
Standardrelated OH= 3412.5*20= 68250
Product level OH are allocated equally, = 58500/2= 29250
Income statement:
OH bifurcation:
Income statement:
Type of OH Total Labor related OH 156000 Batch level OH 136500 Product level OH 58500 Facility level OH- Balance 39000 390000Related Questions
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