Wess Company has limited capacity and can produce either its standard product or its deluxe product. Additional information follows. Per Unit Selling price Direct materials Direct labor Standard $ 94 47 1. Using a single plantwide rate, the company computes overhead cost per unit of $18 for the standard model and $23 for the deluxe model. Which model should the company produce? Hint: Compute product cost per unit and compare that with selling price to get gross profit per unit. 37 2. Using activity-based costing, the company computes overhead cost per unit of $2 for the standard model and $47 for the deluxe model. Which model should the company produce? Hint: Compute product cost per unit and compare that with selling price per unit to get gross profit per unit. Product cost per unit: Standard Deluxe Complete this question by entering your answers in the tabs below. Gross profit per unit: Standard Deluxe Required 1 Required 2 Using a single plantwide rate, the company computes overhead cost per unit of $18 for the standard model and $23 for the deluxe model. Which model should the company produce? Hint: Compute product cost per unit and compare that with selling price to get gross profit per unit. (A negative gross profit should be indicated with a minus sign.) Overhead $ $ Direct materials Selling price Which model should the company produce? Deluxe $ 129 52 42 47 $ 52 $ 120 $ $ Direct Labor Product cost Deluxe 37 $ 42 $ 102 117 $ Gross profit Product Cost per unit 102 117 18 $ 23 $ 18
Wess Company has limited capacity and can produce either its standard product or its deluxe product. Additional information follows. Per Unit Selling price Direct materials Direct labor Standard $ 94 47 1. Using a single plantwide rate, the company computes overhead cost per unit of $18 for the standard model and $23 for the deluxe model. Which model should the company produce? Hint: Compute product cost per unit and compare that with selling price to get gross profit per unit. 37 2. Using activity-based costing, the company computes overhead cost per unit of $2 for the standard model and $47 for the deluxe model. Which model should the company produce? Hint: Compute product cost per unit and compare that with selling price per unit to get gross profit per unit. Product cost per unit: Standard Deluxe Complete this question by entering your answers in the tabs below. Gross profit per unit: Standard Deluxe Required 1 Required 2 Using a single plantwide rate, the company computes overhead cost per unit of $18 for the standard model and $23 for the deluxe model. Which model should the company produce? Hint: Compute product cost per unit and compare that with selling price to get gross profit per unit. (A negative gross profit should be indicated with a minus sign.) Overhead $ $ Direct materials Selling price Which model should the company produce? Deluxe $ 129 52 42 47 $ 52 $ 120 $ $ Direct Labor Product cost Deluxe 37 $ 42 $ 102 117 $ Gross profit Product Cost per unit 102 117 18 $ 23 $ 18
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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