Benton Corporation manufactures computer microphones, which come in two models: Standard and Premium. Data for a representative quarter for the two models follow: Standard Premium Units produced 12,000 3,000 Production runs per quarter 50 25 Direct materials cost per unit $ 30 $ 64 Direct labor cost per unit 50 75 Manufacturing overhead in the plant has three main functions: supervision, setup labor, and incoming material inspection. Data on manufacturing overhead for a representative quarter follow: Supervision $ 247,500 Setup labor 267,375 Incoming inspection 207,000 Total overhead $ 721,875 Required: Compute the unit costs for the two products, Standard and Premium, using the current costing system at Benton (using direct labor costs as the allocation basis for overhead). Compute the unit costs for the two products, Standard and Premium, using the proposed ABC system at Benton. Note: For all requirements, do not round intermediate calculations. Round your answers to 2 decimal places.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Benton Corporation manufactures computer microphones, which come in two models: Standard and Premium. Data for a representative quarter for the two models follow:
| Standard | Premium | |
|---|---|---|
| Units produced | 12,000 | 3,000 |
| Production runs per quarter | 50 | 25 |
| Direct materials cost per unit | $ 30 | $ 64 |
| Direct labor cost per unit | 50 | 75 |
Manufacturing
| Supervision | $ 247,500 |
|---|---|
| Setup labor | 267,375 |
| Incoming inspection | 207,000 |
| Total overhead | $ 721,875 |
Required:
-
Compute the unit costs for the two products, Standard and Premium, using the current costing system at Benton (using direct labor costs as the allocation basis for overhead).
-
Compute the unit costs for the two products, Standard and Premium, using the proposed ABC system at Benton.
Note: For all requirements, do not round intermediate calculations. Round your answers to 2 decimal places.
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