Question 1.2 Alejandro Kirk Manufacturing produces two types of entry doors: Deluxe and Standard. The assignment basis for support costs has been direct labour dollars. For 2021, Alejandro Kirk the following data for the two products: Deluxe Standard Sales units 50,000 400,000 Sales price per unit $650.00 $475.00 Direct material and labour costs per unit $180.00 $130.00 Manufacturing support costs per unit $80.00 $120.00 Last year, Alejandro Kirk Manufacturing purchased an expensive robotics system to allow for more decorative door products in the deluxe product line. The CFO suggested that an ABC analysis could be valuable to help evaluate a product mix and promotion strategy for the next sales campaign. She obtained the following ABC information: Activity Cost Driver Cost Total Deluxe Standard Setups # of setups $500,000 500 400 100 Machine related # of machine hours $4,000,000 600,000 300,000 300,000 Packing # of shipments $5,000,000 250,000 50,000 200,000 Required Using the current traditional (simple) costing system, determine the estimated: total cost of manufacturing one unit for each type of door profit per unit for each type of door Using the activity-based costing data presented above, compute the cost driver rate for each overhead activity compute the revised manufacturing overhead cost per unit for each type of entry door compute the revised total cost to manufacture one unit of each type of entry door

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 1.2

Alejandro Kirk Manufacturing produces two types of entry doors: Deluxe and Standard. The assignment basis for support costs has been direct labour dollars. For 2021, Alejandro Kirk the following data for the two products:

	Deluxe	Standard
Sales units	50,000	400,000
Sales price per unit	$650.00	$475.00
Direct material and labour costs per unit	$180.00	$130.00
Manufacturing support costs per unit	$80.00	$120.00

Last year, Alejandro Kirk Manufacturing purchased an expensive robotics system to allow for more decorative door products in the deluxe product line. The CFO suggested that an ABC analysis could be valuable to help evaluate a product mix and promotion strategy for the next sales campaign. She obtained the following ABC information:

Activity	Cost Driver	Cost	Total	Deluxe	Standard
Setups	# of setups	$500,000	500	400	100
Machine related	# of machine hours	$4,000,000	600,000	300,000	300,000
Packing	# of shipments	$5,000,000	250,000	50,000	200,000

Required

Using the current traditional (simple) costing system, determine the estimated:
1. total cost of manufacturing one unit for each type of door
2. profit per unit for each type of door
Using the activity-based costing data presented above,
1. compute the cost driver rate for each overhead activity
2. compute the revised manufacturing overhead cost per unit for each type of entry door
3. compute the revised total cost to manufacture one unit of each type of entry door