Part 2: Use the activity-based information below to calculate the cost of each unit c product using machine setups instead of machine hours. Number of Machine Setups Cost Driver Operating Machines Number of Sales Orders Received Number of Units Shipped . ● Cost $12,000 $4,000 $4,000 $8,000 Basic 3 Setups .3 MH 20 Orders 1,000 Units Squirrel- Proof 4 Setups .5 MH 40 Orders 2,000 Units Deluxe 5 Setups .4 MH 45 Orders Write a paper, no more than one page in length, that discusses the following: • What are your observations when you compare the results for each method? Which do you think is more accurate and why? Based on your results, would you recommend the firm change the level of production for any category and why? 1,800 Units

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Part 2: Use the activity-based information below to calculate the cost of each unit of
product using machine setups instead of machine hours.
Cost Driver
Number of Machine Setups
Operating Machines
Number of Sales Orders Received
Number of Units Shipped
Cost
$12,000
$4,000
$4,000
$8,000
Basic
3 Setups
.3 MH
20 Orders
1,000 Units
Squirrel-
Proof
4 Setups
.5 MH
40 Orders
2,000 Units
Deluxe
5 Setups
.4 MH
45 Orders
1,800 Units
Write a paper, no more than one page in length, that discusses the following:
What are your observations when you compare the results for each method?
Which do you think is more accurate and why?
Based on your results, would you recommend the firm change the level of
production for any category and why?
Transcribed Image Text:Part 2: Use the activity-based information below to calculate the cost of each unit of product using machine setups instead of machine hours. Cost Driver Number of Machine Setups Operating Machines Number of Sales Orders Received Number of Units Shipped Cost $12,000 $4,000 $4,000 $8,000 Basic 3 Setups .3 MH 20 Orders 1,000 Units Squirrel- Proof 4 Setups .5 MH 40 Orders 2,000 Units Deluxe 5 Setups .4 MH 45 Orders 1,800 Units Write a paper, no more than one page in length, that discusses the following: What are your observations when you compare the results for each method? Which do you think is more accurate and why? Based on your results, would you recommend the firm change the level of production for any category and why?
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