Bismarck Cameras, Inc. manufactures two models of cameras. Model ZM has a zoom lens; Model DS has a fixed lens. Bismarck uses an activity-based costing system. The following are the relevant cost data for the previous month: Direct Cost per Unit Direct materials Direct labor Model ZM Model DS $ 45 $ 20 32 15 Estimated Cost Cost Driver Use of Cost Driver Category Unit level Batch level Product level $ 27,000 50,000 90,000 300,000 Number of units ZM: 2,400 units; DS: 9,600 units ZM: 25 setups; DS: 25 setups ZM: 15; DS: 10 Number of setups Number of TV commercials Facility level Number of machine hours ZM: 500 hours; DS: 1,000 hours $467,000 Total Bismarck's facility has the capacity to operate 4,500 machine hours per month. Required a. Compute the cost per unit for each product. b. The current market price for products comparable to Model ZM is $200 and for DS is $86. If Bismarck sold all of its products at the
Bismarck Cameras, Inc. manufactures two models of cameras. Model ZM has a zoom lens; Model DS has a fixed lens. Bismarck uses an activity-based costing system. The following are the relevant cost data for the previous month: Direct Cost per Unit Direct materials Direct labor Model ZM Model DS $ 45 $ 20 32 15 Estimated Cost Cost Driver Use of Cost Driver Category Unit level Batch level Product level $ 27,000 50,000 90,000 300,000 Number of units ZM: 2,400 units; DS: 9,600 units ZM: 25 setups; DS: 25 setups ZM: 15; DS: 10 Number of setups Number of TV commercials Facility level Number of machine hours ZM: 500 hours; DS: 1,000 hours $467,000 Total Bismarck's facility has the capacity to operate 4,500 machine hours per month. Required a. Compute the cost per unit for each product. b. The current market price for products comparable to Model ZM is $200 and for DS is $86. If Bismarck sold all of its products at the
Chapter1: Financial Statements And Business Decisions
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Question
Transcribed Image Text:Bismarck Cameras, Inc. manufactures two models of cameras. Model ZM has a zoom lens; Model DS has a fixed lens. Bismarck uses
an activity-based costing system. The following are the relevant cost data for the previous month:
Direct Cost per Unit
Model ZM
Model DS
Direct materials
$ 45
$ 20
Direct labor
32
15
Estimated Cost
Use of Cost Driver
Category
Unit level
Cost Driver
$ 27,000
50,000
90,000
300,000
Number of units
ZM: 2,400 units; DS: 9,600 units
ZM: 25 setups; DS: 25 setups
ZM: 15; DS: 10
ZM: 500 hours; DS: 1,000 hours
Batch level
Number of setups
Product level
Number of TV commercials
Facility level
Number of machine hours
$467,000
Total
Bismarck's facility has the capacity to operate 4,500 machine hours per month.
Required
a. Compute the cost per unit for each product.
b. The current market price for products comparable to Model ZM is $200 and for DS is $86. If Bismarck sold all of its products at the
market prices, what was its profit or loss for the previous month?
c. A market expert believes that Bismarck can sell as many cameras as it can produce by pricing Model ZM at $196 and Model DS at
$84. Bismarck would like to use those estimates as its target prices and have a profit margin of 30 percent of target prices. What is
the target cost for each product?
Complete this question by entering your answers in the tabs below.
Required A
Required B
Required C
Compute the cost per unit for each product. (Round intermediate calculations and final answers to 2 decimal places.)
Турe of
Product
Direct
Allocated
+ Direct Labor +
Total
Materials
Overhead
Model ZM
$
0.00
+
Model DS
0.00
+
< Required A
Required B
>
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