Product Profitability Sandford Inc. manufactures lawn mowers and garden tractors. Lawn mowers are relatively simple to produce and are made in large quantities. Garden tractors are customized to individual wholesale customer specifications. The company produces and sells 300,000 lawn mowers and 30,000 garden tractors annually. Revenues and costs incurred for each product are as follows: Revenue Direct material Direct labor ($20 per hour) Overhead 7 Manufacturing overhead totals $3,960,000. a. Calculate the profit (loss) in total and per unit for each product if overhead is assigned to product using a per-unit basis. Note: Round your final answers to two decimal places (i.e. round $4.355 to $4.36). Mowers Tractors Total Profit (loss) in total $ Profit (loss) per unit s Lawn Mowers Garden Tractors $19,500,000 $17,850,000 4,000,000 2,700,000 2,800,000 6,000,000 Profit (loss) in total $ Profit (loss) per unit $ 30.33 $ b. Calculate the profit (loss) in total and per unit for each product if overhead is assigned to products using a direct labor hour basis. Note: Round your final answers to two decimal places (i.e. round $4.355 to $4.36). Mowers Tractors Total Profit (loss) in total $ Profit (loss) per unit s $ 38.13 $ 293 c. Assume that manufacturing overhead can be divided into two cost pools as follows: $1,320,000, which has a cost driver of direct labor hours, and $2,640,000, which has a cost driver of machine hours (totaling 150,000). Lawn mower production uses 25,000 machine hours; garden tractor production uses 125,000 machine hours. Calculate the profit (loss) in total and per unit for each product if overhead is assigned to products using these two over head bases. Note: Round your final answers to two decimal places (i.e. round $4.355 to $4.36). Mowers Tractors Total S 39.47 $ 215 201.67
Product Profitability Sandford Inc. manufactures lawn mowers and garden tractors. Lawn mowers are relatively simple to produce and are made in large quantities. Garden tractors are customized to individual wholesale customer specifications. The company produces and sells 300,000 lawn mowers and 30,000 garden tractors annually. Revenues and costs incurred for each product are as follows: Revenue Direct material Direct labor ($20 per hour) Overhead 7 Manufacturing overhead totals $3,960,000. a. Calculate the profit (loss) in total and per unit for each product if overhead is assigned to product using a per-unit basis. Note: Round your final answers to two decimal places (i.e. round $4.355 to $4.36). Mowers Tractors Total Profit (loss) in total $ Profit (loss) per unit s Lawn Mowers Garden Tractors $19,500,000 $17,850,000 4,000,000 2,700,000 2,800,000 6,000,000 Profit (loss) in total $ Profit (loss) per unit $ 30.33 $ b. Calculate the profit (loss) in total and per unit for each product if overhead is assigned to products using a direct labor hour basis. Note: Round your final answers to two decimal places (i.e. round $4.355 to $4.36). Mowers Tractors Total Profit (loss) in total $ Profit (loss) per unit s $ 38.13 $ 293 c. Assume that manufacturing overhead can be divided into two cost pools as follows: $1,320,000, which has a cost driver of direct labor hours, and $2,640,000, which has a cost driver of machine hours (totaling 150,000). Lawn mower production uses 25,000 machine hours; garden tractor production uses 125,000 machine hours. Calculate the profit (loss) in total and per unit for each product if overhead is assigned to products using these two over head bases. Note: Round your final answers to two decimal places (i.e. round $4.355 to $4.36). Mowers Tractors Total S 39.47 $ 215 201.67
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Product Profitability
Sandford Inc. manufactures lawn mowers and garden tractors. Lawn mowers are relatively simple to produce and are made in large quantities.
Garden tractors are customized to individual wholesale customer specifications. The company produces and sells 300,000 lawn mowers and
30,000 garden tractors annually. Revenues and costs incurred for each product are as follows:
Revenue
Direct material
Direct labor ($20 per hour)
Overhead
?
Manufacturing overhead totals $3,960,000.
a. Calculate the profit (loss) in total and per unit for each product if overhead is assigned to product using a per-unit basis.
Note: Round your final answers to two decimal places (i.e. round $4.355 to $4.36).
Mowers Tractors
Total
Profit (loss) in total $
Profit (loss) per unit s
Lawn Mowers Garden Tractors
$19,500,000
$17,850,000
4,000,000
2,700,000
2,800,000
6,000,000
Profit (loss) in total $
Profit (loss) per unit $
$
30.33 $
b. Calculate the profit (loss) in total and per unit for each product if overhead is assigned to products using a direct labor hour basis.
Note: Round your final answers to two decimal places (i.e. round $4.355 to $4.36).
Mowers
Tractors
Total
Profit (loss) in total $
Profit (loss) per unit $
$
38.13 $
293
c. Assume that manufacturing overhead can be divided into two cost pools as follows: $1,320,000, which has a cost driver of direct labor hours,
and $2,640,000, which has a cost driver of machine hours (totaling 150,000). Lawn mower production uses 25,000 machine hours; garden tractor
production uses 125,000 machine hours. Calculate the profit (loss) in total and per unit for each product if overhead is assigned to products
using these two over head bases.
Note: Round your final answers to two decimal places (i.e. round $4.355 to $4.36).
Mowers
Tractors
Total
S
39.47 $
215
201.67
$
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