Company: PLAY IT AGAIN SAM, INC. You are a middle manager of Play it Again Sam, Inc., a manufacturer and seller of electronic keyboard instruments, digital pianos, and other musical electronics. You are primarily responsible for two products sold by Play It Again Sam, Inc., made in Lincoln, NE. One is a standard electronic keyboard that sells for $920 and in constructed from medium-grade materials. The other model is a customized digital piano. The digital piano sells for $1,275. Both instruments require 14 hours of direct labor to produce, but the digital piano is manufactured by more experienced workers who are paid at a higher rate. Selected information regarding sales, production, and cost information for last year is as follows: Sales and production volume in units Total direct labor hours (12 hours per unit) More information: Unit Costs: Direct materials Direct labor Manufacturing overhead Total Unit Costs Manufacturing overhead costs: Indirect Materials Supervision Building depreciation Maintenance Purchasing Inspection Electronic Keyboard 700 units 9,800 hours Electronic Keyboard $ 395 280 $ 22,100 45,368 67,200 23,800 Digital Piano 300 units 4,200 hours Total Amounts 19,812 16,320 Digital Piano $ 620 364 Total manufacturing overhead costs The company allocates overhead costs using conventional costing using direct labor hours. You are concerned that the conventional cost-allocation system the company is using may not be generating accurate information so the resulting sales prices may also be improperly determined. You decide to perform some computations and report your results to your superior, Sandy Andersen. (d) the current per-unit gross profit generated by the sale of an electronic keyboard, and (e) the current per-unit gross profit generated by the sale of a digital piano.
Company: PLAY IT AGAIN SAM, INC. You are a middle manager of Play it Again Sam, Inc., a manufacturer and seller of electronic keyboard instruments, digital pianos, and other musical electronics. You are primarily responsible for two products sold by Play It Again Sam, Inc., made in Lincoln, NE. One is a standard electronic keyboard that sells for $920 and in constructed from medium-grade materials. The other model is a customized digital piano. The digital piano sells for $1,275. Both instruments require 14 hours of direct labor to produce, but the digital piano is manufactured by more experienced workers who are paid at a higher rate. Selected information regarding sales, production, and cost information for last year is as follows: Sales and production volume in units Total direct labor hours (12 hours per unit) More information: Unit Costs: Direct materials Direct labor Manufacturing overhead Total Unit Costs Manufacturing overhead costs: Indirect Materials Supervision Building depreciation Maintenance Purchasing Inspection Electronic Keyboard 700 units 9,800 hours Electronic Keyboard $ 395 280 $ 22,100 45,368 67,200 23,800 Digital Piano 300 units 4,200 hours Total Amounts 19,812 16,320 Digital Piano $ 620 364 Total manufacturing overhead costs The company allocates overhead costs using conventional costing using direct labor hours. You are concerned that the conventional cost-allocation system the company is using may not be generating accurate information so the resulting sales prices may also be improperly determined. You decide to perform some computations and report your results to your superior, Sandy Andersen. (d) the current per-unit gross profit generated by the sale of an electronic keyboard, and (e) the current per-unit gross profit generated by the sale of a digital piano.
Chapter3: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 2TP: Roald is the sales manager for a small regional manufacturing firm you own. You have asked him to...
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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:Company: PLAY IT AGAIN SAM, INC.
You are a middle manager of Play it Again Sam, Inc., a manufacturer and seller of electronic keyboard
instruments, digital pianos, and other musical electronics.
You are primarily responsible for two products sold by Play It Again Sam, Inc., made in Lincoln, NE. One is a
standard electronic keyboard that sells for $920 and in constructed from medium-grade materials. The other
model is a customized digital piano. The digital piano sells for $1,275. Both instruments require 14 hours of
direct labor to produce, but the digital piano is manufactured by more experienced workers who are paid at a
higher rate. Selected information regarding sales, production, and cost information for last year is as follows:
Sales and production volume in units
Total direct labor hours (12 hours per unit)
More information:
Unit Costs:
Direct materials
Direct labor
Manufacturing overhead
Total Unit Costs
Manufacturing overhead costs:
Indirect Materials
Supervision
Building depreciation
Maintenance
Purchasing
Inspection
Electronic Keyboard
700 units
9,800 hours
Electronic Keyboard
$ 395
280
$ 22,100
45,368
67,200
23,800
Digital Piano
300 units
4,200 hours
Total Amounts
19,812
16,320
Digital Piano
$ 620
364
?
Total manufacturing overhead costs
The company allocates overhead costs using conventional costing using direct labor hours. You are
concerned that the conventional cost-allocation system the company is using may not be generating accurate
information so the resulting sales prices may also be improperly determined. You decide to perform some
computations and report your results to your superior, Sandy Andersen.
(d) the current per-unit gross profit generated by the sale of an electronic keyboard, and
(e) the current per-unit gross profit generated by the sale of a digital piano.
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