19. (15 points) ABC Lennox Industries manufactures two products: A and B. A revi
ID: 2584687 • Letter: 1
Question
19. (15 points) ABC Lennox Industries manufactures two products: A and B. A review of the company's accounting records revealed the following per-unit costs and production volumes Production volume (units) Direct material Direct labor: 2,500 5,000 60 $40 S 2 hours at $12 3 hours at $12 24 36 Manufacturing overhead 2 hours at S93 3 hours at $93 279 ,000 direct labor Manufacturing overhead is currently computed by spreading overhead of $1,860,000 over 20 procedures, and the following data are available: hours. Manageme nt is considering a shift to activity-based costing in an effort to improve the firm's accounting 93 Ph Cost Pool Cost 20 120 100 S 240,000 Number of setups Setups General factory Machine processing 1,500,000 Direct labor hours 5,000 15,000 20,000 2,200 800 3,000 -120,000 Machine hours Lennox determines selling prices by adding 40% to a product's total cost. Required A. Compute the per-unit overhead cost of product B if the company uses the Cost-Pools (activity-based costing) for applying overhead. ((20/120)x8240,000)/5000 units S8 OH from Setup Pool: ((15000 20000jxS1,500,000)/5000-s225 OH from gen factory pool [(800 3000)x 120.000]/ 5000 units $6.40 from machine proc pool B. Compute B's total per-unit cost. $60 DM+36 DL+16+450 + 12.80 $574.80Explanation / Answer
A
Set ups
$2,40,000
120 setups
$2,000
per setup
General Factory
1500000
20000 direct labor hours
$75
Per direct labor hour
Machine processing
120000
3000Machine hours
$40
Per machine hour
Overhead cost for product B
Setups
20 setup x 2000
40000
General Factory
15000 labor hours x $75
1125000
Machine processing
800 machine hours x $40
32000
1197000
Overhead per unit
$1197000/5000 units
$239.40
$
B
Direct Materials
$60
Direct Labor
$36
Manufacturing overhead
$239.40
Per unit cost
$335.40
Mark up
$134.16
Selling price
$469.56
Norwood appliance produces washers and dryers in an assembly line process. Associated costs incurred during a recent period were. How much of these are not manufacturing costs?
Costs which are directly related to production are called manufacturing costs
Non manufacturing cost : corporate executive + advertising = $180,000
A
Set ups
$2,40,000
120 setups
$2,000
per setup
General Factory
1500000
20000 direct labor hours
$75
Per direct labor hour
Machine processing
120000
3000Machine hours
$40
Per machine hour
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