Amba Furniture manufactures two models of its couch, the Cozy and the Relax. The Cozy model requires 8,000 direct labor hours, and the Relax model requires 32,000 direct labor hours. The company produces 5,000 units of the Cozy model and 2,000 units of the Relax model each year. The company produces the Cozy model in batch sizes of 250, while it produces the Relax model in batch sizes of 200. The company expects to incur $240,000 of total setup costs this year. How much of the setup costs are allocated to the Cozy model using ABC costing?

Amba Furniture manufactures two models of its couch, the Cozy and the Relax. The Cozy model requires 8,000 direct labor hours, and the Relax model requires 32,000 direct labor hours. The company produces 5,000 units of the Cozy model and 2,000 units of the Relax model each year. The company produces the Cozy model in batch sizes of 250, while it produces the Relax model in batch sizes of 200. The company expects to incur $240,000 of total setup costs this year. How much of the setup costs are allocated to the Cozy model using ABC costing?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 25P: Taylor Company produces two industrial cleansers that use the same liquid chemical input: Pocolimpio...

See similar textbooks

Similar questions

How much of the setup costs are allocated to the mini model using ABC costing on these general accounting question?
Dapper Dan produces a man's suit that sells for $200. Although the company's production capacity is 3,000 suits per year, only 2,500 suits are currently being produced and sold. At this level of production, the company incurs the following costs: Unit-level material cost per suit Unit-level labor cost per suit Unit-level overhead per suit Batch-level set-up costs for each batch of 500 suits Annual product-level costs Allocated facility-level costs $80 $40 $20 $1,200 $15,000 $50,000 Easton Clothiers has offered to purchase 500 suits as a one-time special purchase at a price of $135. Required: Prepare a quantitative analysis that indicates whether the special order should be accepted. Note: Negative amount should be indicated with a minus sign. Evaluation of special order: Less special order costs:
As a boba manufacturer company, Ngeboba supplies boba to Gula Hula and BobaTime. Ngeboba supplies 100 kgs to Gula Hula per month and also 500 kgs to Boba Time per month. Ngeboba as one of the founders of Gula Hula and BobaTime, felt responsible for the supply of boba for both brands. Ngeboba itself has a product cost of IDR 10,000 per kilo. Ngeboba sells to other customers than Gula Hula and BobaTime for IDR 20,000 per kilogram. Gula Hula gets prices from other suppliers at IDR 17,000 per kilogram, while BobaTime gets 2,000 cheaper prices per kilogram than the price obtained by Gula Hula because it buys more. In general, Ngeboba's production capacity is 2 (two) tons per month. During the 3rd quarter, Ngeboba felt that his sales had risen drastically, so Ngeboba was faced with the following conditions: 1. Demand from customers is full up to 2 (two) tons in July because it is the dry season. With Ngeboba, they felt that they couldn't help but they need to supply Gula Hula and BobaTime.…
As a boba manufacturer company, Ngeboba supplies boba to Gula Hula and BobaTime. Ngeboba supplies 100 kgs to Gula Hula per month and also 500 kgs to Boba Time per month. Ngeboba as one of the founders of Gula Hula and BobaTime, felt responsible for the supply of boba for both brands. Ngeboba itself has a product cost of IDR 10,000 per kilo. Ngeboba sells to other customers than Gula Hula and BobaTime for IDR 20,000 per kilogram. GulaHula gets prices from other suppliers at IDR 17,000 per kilogram, while BobaTime gets 2,000 cheaper prices per kilogram than the price obtained by Gula Hula because it buys more.In general, Ngeboba's production capacity is 2 (two) tons per month. During the 3rd quarter,Ngeboba felt that his sales had risen drastically, so Ngeboba was faced with the following conditions: Demand from customers is full up to 2 (two) tons in July because it is the dry season. With Ngeboba, they felt that they couldn't help but they need to supply Gula Hula and BobaTime. In…
This Little Light, Inc. is a manufacturer of lamps. Little Light makes 40,000 units per year of a part that it uses in the manufacturing of each lamp. At this activity level, the unit production cost is $7.17. Of this amount, $4.71 is for unit variable production costs. The remainder is for fixed production costs and equals $98,400. Little Light has identified an outsider supplier who sells the needed part. If the part is purchased from the outsider supplier, 15% of Little Light's fixed manufacturing costs will be eliminated. Assume Little Light will need 50,000 of the part next year and that the freed up capacity can be rented out to another company for $31,740. At what purchase price will Little Light be economically indifferent between making the part and buying the part? $4.70 $4.86 $5.97 $5.50 $5.64
Gadubhai
Cane Company manufactures two products called Alpha and Beta that sell for $225 and $175, respectively. Each product uses only one type of raw materlal that costs $6 per pound. The company has the capacity to annually produce 130,000 units of each product. Its average cost per unit for each product at this level of activity are given below:
Noland Company manufactures two models of its banjo, the Basic and the Luxury. The Basic model requires 10000 direct labor hours. and the Luxury requires 30000 direct labor hours. The company produces 3400 units of the Basic model and 600 units of the Luxury model each year. The company inspects one Basic for every 100 produced, and inspects one Luxury for every 10 produced. The company expects to incur $658000 of total inspecting costs this year. How much of the inspecting costs should be allocated to the Basic model using ABC costing? O $329000 O $238000 O $559300 O $164500
Stanley Woodworks manufactures wooden cabinets and can either make or buy a specific cabinet door component. The cost to manufacture the component is $12 for direct materials, $9 for direct labor, and $11 for variable overhead. Additionally, a supervisor is required to oversee production of the component at an annual salary cost of $60,000. If Stanley Woodworks requires 120,000 components per year, the maximum purchase price per unit they should consider paying is $__.
Har
Cane Company manufactures two products called Alpha and Beta that sell for $140 and $100, respectively. Each product uses only one type of raw material that costs $8 per pound. The company has the capacity to annually produce 106,000 units of each product. Its average cost per unit for each product at this level of activity is given below:
Justine Corporation currently makes rolls for deli sandwiches it produces. It uses 40,000 rolls annually in the production of deli sandwiches. The costs to make the rolls are given below: Materials $0.24 per roll Labor $0.40 per roll Variable overhead $0.16 per roll Fixed overhead $0.20 per roll A potential supplier has offered to sell Justine the rolls for $0.95 each. If the rolls are purchased, 20% of the fixed overhead could be avoided. If Justine accepts the offer, what will the effect on profit be? $4,400 increase in profit $1,200 increase in profit $3,300 increase in profit $3,300 decrease in profit $4,400 decrease in profit