Units producedMachine-hoursDirect labor-hoursRevenuesDirect materials costsDirect labor costsManufacturing overheadOperating ProfitRevenue-related overheadDirect cost-related overheadTotal overheadSilver2,000590600$ 583,600310,0009,600Total profit (loss)Unit profit (loss)SilverThe team has been discussing two issues. First, there is disagreement about how best to allocate the manufacturingoverhead among the products. The current cost accounting system allocates manufacturing overhead to products basedon expected unit sales. (Because Ferry carries no inventory, unit sales are equal to units produced.) Second, there is aconcern about a "softening" in the demand for these systems and the managers at Ferry want to get a betterunderstanding of possible financial implications if demand should be weaker than expected.Gold1,5002,1001,200$ 793,050533, 25028,800The finance team decides that a two-stage system might improve the information available for management. They do an accountanalysis and determine that there appear to be two main drivers of overhead: revenue and direct costs. Based on the account analysis,the team splits the manufacturing overhead into two pools as follows:$ 176,341384,659$ 561,000GoldPlatinum5001,050750$ 493,350303,00025,350Total4,0003,7402,550d. Compute total and per-unit profits by product line based on the expected (not breakeven) sales by product line using the two-stagecost allocation system developed by the finance team.$ 1,870,0001,146, 25063,750561,000$ 99,000Note: Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Round "Unit profit (loss)"answers to 2 decimal places. Round your "Total profit (loss)" answers to nearest whole dollar.Platinum

Units produced Machine-hours Direct labor-hours Revenues Direct materials costs Direct labor costs Manufacturing overhead Operating Profit Silver 2,000 590 600 $ 583,600 310,000 9,600 Gold 1,500 2,100 1,200 $ 793,050 533,250 28,800 Platinum 500 1,050 750 $ 493,350 303,000 25,350 Total 4,000 3,740 2,550 $ 1,870,000 1,146,250 63,750 561,000 $ 99,000 The team has been discussing two issues. First, there is disagreement about how best to allocate the manufacturing overhead among the products. The current cost accounting system allocates manufacturing overhead to products based on expected unit sales. (Because Ferry carries no inventory, unit sales are equal to units produced.) Second, there is a concern about a "softening" in the demand for these systems and the managers at Ferry want to get a better understanding of possible financial implications if demand should be weaker than expected.

Units produced Machine-hours Direct labor-hours Revenues Direct materials costs Direct labor costs Manufacturing overhead Operating Profit Silver 2,000 590 600 $ 583,600 310,000 9,600 Gold 1,500 2,100 1,200 $ 793,050 533,250 28,800 Platinum 500 1,050 750 $ 493,350 303,000 25,350 Total 4,000 3,740 2,550 $ 1,870,000 1,146,250 63,750 561,000 $ 99,000 The team has been discussing two issues. First, there is disagreement about how best to allocate the manufacturing overhead among the products. The current cost accounting system allocates manufacturing overhead to products based on expected unit sales. (Because Ferry carries no inventory, unit sales are equal to units produced.) Second, there is a concern about a "softening" in the demand for these systems and the managers at Ferry want to get a better understanding of possible financial implications if demand should be weaker than expected.

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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