**Johnston Corp. Manufacturing Cost Analysis**Johnston Corp. manufactures computer desks in its Syracuse, New York, plant. The company uses activity-based costing to allocate all manufacturing conversion costs (direct labor and manufacturing overhead). Its activities and related data are as follows:- **Materials handling**- **Assembling**- **Painting**- **Total manufacturing cost**- **Number of units**- **Manufacturing cost per unit****Requirement 2:** Premanufacturing activities, such as product design, were assigned to the Standard desks at $5 each and to the Unpainted desks at $3 each. Similar analyses were conducted of post-manufacturing activities such as distribution, marketing, and customer service. The post-manufacturing costs were $20 per Standard and $19 per Unpainted desk. Compute the full product costs per desk.| Activity | Standard Desk | Unpainted Desk ||----------|---------------|----------------|| Premanufacturing Cost | $5 | $3 || Post-manufacturing Cost | $20 | $19 || **Full product cost per unit** | [Blank] | [Blank] |**Requirement 3:** Which product costs are reported in the external financial statements? Which costs are used for management decision-making? Explain the difference.| Description | Input Area ||-------------|-------------|| Costs reported in the financial statements | [Dropdown Selection] || Costs for management decisions | [Textbox Input] || Full product costs include the | [Dropdown Selection] | | that are expensed as incurred for external reporting |**Requirement 4:** At what price should Johnston’s managers set for Standard desks to earn a $30 profit per desk?- **Sales price per unit - standard desk:** [Textbox Input]By analyzing the provided details, students can better understand the application of activity-based costing in manufacturing and decision-making processes within a company. This exercise also demonstrates the differences between costs reported in financial statements versus those used for internal management purposes. ### Cost Allocation for Desk Production#### Activity-Based Costing OverviewActivity-Based Costing (ABC) assigns manufacturing costs to products based on the activities required to produce each item. By understanding the resource usage for each activity, businesses can more accurately allocate costs to products, leading to better pricing and cost management decisions.#### Budgeted Cost of Activity**Materials Handling**- Budgeted Cost: $300,000- Allocation Base: Number of parts- Cost Allocation Rate: $0.60 per part**Assembling**- Budgeted Cost: $2,500,000- Allocation Base: Direct labor hours- Cost Allocation Rate: $14.00 per direct labor hour**Painting**- Budgeted Cost: $190,000- Allocation Base: Number of painted desks- Cost Allocation Rate: $4.90 per painted desk#### Product Data for MarchJohnston produced two styles of desks in March: the Standard desk and the Unpainted desk. The following table summarizes the data for each type:| Product | Total Units Produced | Total Direct Materials Costs | Total Number of Parts | Total Assembling Direct Labor Hours ||-----------------|----------------------|------------------------------|-----------------------|-------------------------------------|| Standard Desk | 6,000 | $114,000 | 121,000 | 6,000 || Unpainted Desk | 2,500 | $39,800 | 31,000 | 1,000 |This data provides insight into the production volume, material usage, and labor hours required for each desk type.#### Analysis of Graphs and DiagramsWhile the provided data does not include visual graphs or diagrams, the tabulated figures offer a detailed view of the cost allocation process. Here’s how the data can be interpreted:- **Materials Handling:** Each part used in production incurs a cost of $0.60. Understanding the total number of parts helps in determining the materials handling cost for each desk type. - **Assembling:** The assembling cost is directly tied to the number of direct labor hours, with each hour costing $14.00. This allocation shows how labor-intensive the assembling activity is for both Standard and Unpainted desks. - **Painting:** This activity is relevant only for the Standard desk type, where a cost of $4.90 is allocated per painted desk. Since Unpainted desks do not

Name: **Johnston Corp. Manufacturing Cost Analysis**Johnston Corp. manufact
Uploaded: 2024-03-20T06:32:49.000Z
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Description: **Johnston Corp. Manufacturing Cost Analysis**Johnston Corp. manufactures computer desks in its Syracuse, New York, plant. The company uses activity-based costing to allocate all manufacturing conversion costs (direct labor and manufacturing overhea