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Paper No. 2 PART 1: A-COMPLETING THE FOLLOWING TABLES (Notes: You are required to show all relevent computations on the other side of this paper.) Doyale Gajestic Overhead Rate Rate Cost Assigned Drivers Used Cost Assigned Purchase orders Machine setups Machine hours Inspections Total assigned costs Units produced Cost per unit Direct materials Direct labor Manufacturing overhead Total cost per unit Sales price per unit Drivers Used Total Overhe

Paper No. 2 PART 1: A-COMPLETING THE FOLLOWING TABLES (Notes: You are required to show all relevent computations on the other side of this paper.) Doyale Gajestic Overhead Rate Rate Cost Assigned Drivers Used Cost Assigned Purchase orders Machine setups Machine hours Inspections Total assigned costs Units produced Cost per unit Direct materials Direct labor Manufacturing overhead Total cost per unit Sales price per unit Drivers Used Total Overhe

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Paper No. 2 PART 1: A-COMPLETING THE FOLLOWING TABLES (Notes: You are required to show all relevent computations on the other side of this paper.) Dovale Gajestic Rate Cost Assigned Total Overhead Overhead Rate Purchase orders Machine setups Machine hours Inspections Total assigned costs Units produced Cost per unit Direct materials Direct labor Manufacturing overhead Total cost per unit Sales price per unit Cost per unit Gross profit Drivers Used Cost Assigned Drivers Used
Transcribed Image Text:Paper No. 2 PART 1: A-COMPLETING THE FOLLOWING TABLES (Notes: You are required to show all relevent computations on the other side of this paper.) Dovale Gajestic Rate Cost Assigned Total Overhead Overhead Rate Purchase orders Machine setups Machine hours Inspections Total assigned costs Units produced Cost per unit Direct materials Direct labor Manufacturing overhead Total cost per unit Sales price per unit Cost per unit Gross profit Drivers Used Cost Assigned Drivers Used
PART 1: COMPLETING MISSING INFORMATION BONZZE Electronics manufactures two large-screen television models: the Foyale which sells for $1,800, and a new model, the Lajestic, which sells for $1,350. The production cost computed per unit under traditional costing for each model in 2021 was as follows. Traditional Costing Foyale Lajestic Direct materials Direct labor ($20 per hour) Mfg overhead ($38 per DLH) Total per unit cost $1,200 In 2021, BONZZE manufactured 26,000 units of the Foyale and 10,000 units of the Lajestic. The overhead rate of $38 per direct labor hour was determined by dividing total expected manufacturing overhead of $7,500,000 by the total direct labor hours (200,000) for the two models. Under traditional costing, the gross profit on the models was Foyale $600 or ($1,800 - $1,200), and Lajestic $570 or ($1,350 - $780). Because of this difference, management is considering phasing out the Foyale model and increasing the produc- tion of the Lajestic model. Cost Driver Number of orders Number of setups Machine hours Before finalizing its decision, management asks BONZZE's controller to prepare an analysis using activity-based costing (ABC). The controller accumulates the following information about overhead for the year ended December 31, 2021. Expected Use of Activity Purchasing Machine setups Machining Quality control Number of inspections $800 150 250 The cost drivers used for each product were: Cost Driver Purchase orders Machine setups Machine hours Inspections Foyale 17,000 5,000 75,000 11,000 $450 120 210 $780 Estimated Overhead $1,280,000 918,000 4,800,000 700,000 Lajestic 23,000 13,000 45,000 17,000 CostDrivers 40,000 18,000 120,000 28,000 Total 40,000 18,000 120,000 28,000 Required: A. Assign the total 2021 manufacturing overhead costs to the two products using activity-based costing (ABC). What was the cost per unit and gross profit of each model using ABC costing? B. Are management's future plans for the two models sound? Why?
Transcribed Image Text:PART 1: COMPLETING MISSING INFORMATION BONZZE Electronics manufactures two large-screen television models: the Foyale which sells for $1,800, and a new model, the Lajestic, which sells for $1,350. The production cost computed per unit under traditional costing for each model in 2021 was as follows. Traditional Costing Foyale Lajestic Direct materials Direct labor ($20 per hour) Mfg overhead ($38 per DLH) Total per unit cost $1,200 In 2021, BONZZE manufactured 26,000 units of the Foyale and 10,000 units of the Lajestic. The overhead rate of $38 per direct labor hour was determined by dividing total expected manufacturing overhead of $7,500,000 by the total direct labor hours (200,000) for the two models. Under traditional costing, the gross profit on the models was Foyale $600 or ($1,800 - $1,200), and Lajestic $570 or ($1,350 - $780). Because of this difference, management is considering phasing out the Foyale model and increasing the produc- tion of the Lajestic model. Cost Driver Number of orders Number of setups Machine hours Before finalizing its decision, management asks BONZZE's controller to prepare an analysis using activity-based costing (ABC). The controller accumulates the following information about overhead for the year ended December 31, 2021. Expected Use of Activity Purchasing Machine setups Machining Quality control Number of inspections $800 150 250 The cost drivers used for each product were: Cost Driver Purchase orders Machine setups Machine hours Inspections Foyale 17,000 5,000 75,000 11,000 $450 120 210 $780 Estimated Overhead $1,280,000 918,000 4,800,000 700,000 Lajestic 23,000 13,000 45,000 17,000 CostDrivers 40,000 18,000 120,000 28,000 Total 40,000 18,000 120,000 28,000 Required: A. Assign the total 2021 manufacturing overhead costs to the two products using activity-based costing (ABC). What was the cost per unit and gross profit of each model using ABC costing? B. Are management's future plans for the two models sound? Why?
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