Edile Accessories (EA) makes travel bags, both for sale under their own label ("Branded") and for other resellers to put their label on the bags ("Private-Label"). The bags sold through the two channels are similar, but they differ slightly in the quality of materials and detail in the manufacturing process. The manufacturing plant at EA has two departments. Department A-101 was the original manufacturing facility and many of the machines are original. Department A-102 is new, with state-of-the-art equipment. The new equipment facilitates the additional care taken with the Branded product. The following information presents financial results for the two models from last year: Private Label Sales revenue Direct material Direct labor Branded $ 804,000 $ 624,000 252,000 180,000 a. Using plantwide allocation b. Using department allocation. 188,400 128,400 Manufacturing overhead. Department A-101 Department A-102 Total overhead The product costing system at EA allocates manufacturing overhead on the basis of direct labor costs. Required: a. Compute the profit or loss for each product using plantwide allocation. b. Compute the profit or loss for each product using department allocation. Note: For all requirements, loss amounts should be indicated by minus sign. Do not round Intermediate calculations. Enter your answers rounded to the nearest whole number. Profit or Loss Private Label Total $1,428,000 440,400 308,400 $ 237,600 317,520 $ 555,120 Branded
Edile Accessories (EA) makes travel bags, both for sale under their own label ("Branded") and for other resellers to put their label on the bags ("Private-Label"). The bags sold through the two channels are similar, but they differ slightly in the quality of materials and detail in the manufacturing process. The manufacturing plant at EA has two departments. Department A-101 was the original manufacturing facility and many of the machines are original. Department A-102 is new, with state-of-the-art equipment. The new equipment facilitates the additional care taken with the Branded product. The following information presents financial results for the two models from last year: Private Label Sales revenue Direct material Direct labor Branded $ 804,000 $ 624,000 252,000 180,000 a. Using plantwide allocation b. Using department allocation. 188,400 128,400 Manufacturing overhead. Department A-101 Department A-102 Total overhead The product costing system at EA allocates manufacturing overhead on the basis of direct labor costs. Required: a. Compute the profit or loss for each product using plantwide allocation. b. Compute the profit or loss for each product using department allocation. Note: For all requirements, loss amounts should be indicated by minus sign. Do not round Intermediate calculations. Enter your answers rounded to the nearest whole number. Profit or Loss Private Label Total $1,428,000 440,400 308,400 $ 237,600 317,520 $ 555,120 Branded
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Edile Accessories (EA) makes travel bags, both for sale under their own label ("Branded") and for other resellers to put their
label on the bags ("Private-Label"). The bags sold through the two channels are similar, but they differ slightly in the quality of
materials and detail in the manufacturing process.
The manufacturing plant at EA has two departments. Department A-101 was the original manufacturing facility and many of the
machines are original. Department A-102 is new, with state-of-the-art equipment. The new equipment facilitates the additional
care taken with the Branded product.
The following information presents financial results for the two models from last year:
Private
Label
Sales revenue
Direct material
Direct labor
Branded
$ 804,000 $ 624,000
252,000
180,000
a. Using plantwide allocation
b. Using department allocation.
188,400
128,400
Manufacturing overhead.
Department A-101
Department A-102
Total overhead
The product costing system at EA allocates manufacturing overhead on the basis of direct labor costs.
Total
$1,428,000
Profit or Loss
Private Label
Required:
a. Compute the profit or loss for each product using plantwide allocation.
b. Compute the profit or loss for each product using department allocation.
Note: For all requirements, loss amounts should be indicated by minus sign. Do not round intermediate calculations.
Enter your answers rounded to the nearest whole number.
440,400
308,400
$ 237,600
317,520
$ 555,120
Branded
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