Exercise 5-11A Allocating facility-level costs and a product elimination decision Blevins Boards produces two kinds of skateboards. Selected unit data for the two boards for the last quarter follow. Production costs Direct materials Direct labor Allocated overhead Total units produced and sold Total sales revenue Basco Boards Shimano Boards Required a. Compute the per-unit cost for each product. b. Compute the profit for each product. $25 $32 $15 5,000 $ 500,000 $38 $54 $18 10,000 $1,400,000 Blevins allocates production overhead using activity-based costing. It allocates delivery expense and sales commissions, which amount to $54,000 per quarter, to the two products equally.

Exercise 5-11A Allocating facility-level costs and a product elimination decision Blevins Boards produces two kinds of skateboards. Selected unit data for the two boards for the last quarter follow. Production costs Direct materials Direct labor Allocated overhead Total units produced and sold Total sales revenue Basco Boards Shimano Boards Required a. Compute the per-unit cost for each product. b. Compute the profit for each product. $25 $32 $15 5,000 $ 500,000 $38 $54 $18 10,000 $1,400,000 Blevins allocates production overhead using activity-based costing. It allocates delivery expense and sales commissions, which amount to $54,000 per quarter, to the two products equally.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question Content Area Prior to installing a JIT system, Grindstone Company used machine hours to assign maintenance costs to its three products of 4-inch, 6-inch, and 9-inch insulation. The maintenance costs totaled $432,000 per year. The machine hours used by each product and the quantity produced of each product are as follows: Machine Hours Quantity Produced 4-inch 5,000 15,000 rolls 6-inch 12,000 12,500 rolls 9-inch 7,000 11,200 rolls After installing JIT, three manufacturing cells were created, and the cell workers were trained to perform maintenance. Maintenance costs for the three cells still totaled $432,000; however, these costs are now traceable to each cell. Cell, 4-inch $125,000 Cell, 6-inch 175,000 Cell, 9-inch 165,000 The maintenance cost per roll of 9-inch insulation before JIT is installed would be a. $14.00. b. $11.25. c. $7.75. d. $30.00.
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