Shady Fabrication Group (SFG) manufactures components for manufacturing equipment at several facilities. Thecompany produces two, related, parts at its Park River Plant, the models SF-08 and SF-48. The differences in themodels are the quality of the materials and the precision to which they are produced. The SF-48 model is used inapplications where the precision is critical and thus requires greater oversight in the production process.Although sales remain reasonably strong, managers at SFG have noticed that the company is meeting more resistanceto the pricing for SF-08, although there seems to be little need for negotiation on the price of the SF-48 model. As aresult, the marketing manager at SFG has asked the financial staff to review the costs of the two products tounderstand better what might be happening in the market.Manufacturing overhead is currently assigned to products based on their direct labor costs. For the most recent monthmanufacturing overhead was $201,600. During that time, the company produced 8,960 units of Model SF-08 and 2,240units of Model SF-48. The direct costs of production were as follows:Direct materialsDirect laborCost DriverDirect materialcostsNumber of productionrunsNumber ofinspectionsTotal overheadManagement determined that overhead costs are caused by three cost drivers. These drivers and their costs for lastmonth were as follows:SF-08$179,200100,800134,400 89,600Required RequiredABSF-48$Total overheadTotal unit costSF-08Total$60, 48085, 120$ 201,600280,000224,000Overhead Activity LevelCostsSF-08SF-48$ 56,000179,200 100,800SF-4820840Required:a. How much overhead will be assigned to each product if these three cost drivers are used to allocate overhead?What is the total cost per unit produced for each product?b. How much of the overhead will be assigned to each product if direct labor cost is used to allocate overhead? What isthe total cost per unit produced for each product?11Complete this question by entering your answers in the tabs below.Total280,0006019How much overhead will be assigned to each product if these three cost drivers are used toallocate overhead? What is the total cost per unit produced for each product?Note: Round "Total unit cost" to 2 decimal places.Show less A

The overhead is assigned to the production on the basis of the different activity rates. The total…

Shady Fabrication Group (SFG) manufactures components for manufacturing equipment at several facilities. The company produces two, related, parts at its Park River Plant, the models SF-08 and SF-48. The differences in the models are the quality of the materials and the precision to which they are produced. The SF-48 model is used in applications where the precision is critical and thus requires greater oversight in the production process. Although sales remain reasonably strong, managers at SFG have noticed that the company is meeting more resistance to the pricing for SF-08, although there seems to be little need for negotiation on the price of the SF-48 model. As a result, the marketing manager at SFG has asked the financial staff to review the costs of the two products to understand better what might be happening in the market. Manufacturing overhead is currently assigned to products based on their direct labor costs. For the most recent month manufacturing overhead was $201,600. During that time, the company produced 8,960 units of Model SF-08 and 2,240 units of Model SF-48. The direct costs of production were as follows: SF-48 SF-08 $ 179,200 100,800 134,400 89,600 Direct materials Direct labor Cost Driver Direct material costs Number of production runs Number of Total inspections Total overhead Management determined that overhead costs are caused by three cost drivers. These drivers and their costs for last month were as follows: 280,000 224,000 $ Overhead Activity Level Costs SF-08 SF-48 $ 56,000 179,200 100,800 60,480 85, 120 $ 201,600 20 8 40 11 Total 280,000 60 19

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q