Wharton, Inc. produces two products, M-24 and L-Z15. M-24 is a high-volume item totaling 25,000 units annually, while L- Z15 is a low-volume item totaling 8,000 units per year. M-24 requires 1.5 hours of direct labor per unit, while each unit of L-Z15 requires 3 hours. Therefore, total annual direct labor hours are 64,500 (37,500 + 24,000). Expected annual manufacturing overhead costs are $2,100,000. Wharton uses a traditional costing system and assigns overhead based on direct labor hours. Each unit of L-Z15 would be assigned overhead of

Wharton, Inc. produces two products, M-24 and L-Z15. M-24 is a high-volume item totaling 25,000 units annually, while L- Z15 is a low-volume item totaling 8,000 units per year. M-24 requires 1.5 hours of direct labor per unit, while each unit of L-Z15 requires 3 hours. Therefore, total annual direct labor hours are 64,500 (37,500 + 24,000). Expected annual manufacturing overhead costs are $2,100,000. Wharton uses a traditional costing system and assigns overhead based on direct labor hours. Each unit of L-Z15 would be assigned overhead of

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 1PA: Colonels uses a traditional cost system and estimates next years overhead will be $480,000, with the...

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Bobcat uses a traditional cost system and estimates next years overhead will be $800.000, as driven by the estimated 25,000 direct labor hours. It manufactures three products and estimates the following costs: If the labor rate is $30 per hour, what is the per-unit cost of each product?
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Power Corp. makes 2 products: blades for table saws and blades for handsaws. Each product passes through the sharpening machine area, which is the chief constraint during production. Handsaw blades take 15 minutes on the sharpening machine and have a contribution margin per blade of $15. Table saw blades take 20 minutes on the sharpening machine and have a contribution margin per blade of $35. If it is assumed that Power Corp. has 5,000 hours available on the sharpening machine to service a minimum demand for each product of 4,000 units, how much will profits increase if 200 more hours of machine time can be obtained?
Power Corp. makes 2 products: blades for table saws and blades for handsaws. Each product passes through the sharpening machine area, which is the chief constraint during production. Handsaw blades take 15 minutes on the sharpening machine and have a contribution margin per blade of $15. Table saw blades take 20 minutes on the sharpening machine and have a contribution margin per blade of $35. If it is assumed that Power Corp. has 5,000 hours available on the sharpening machine to service a minimum demand for each product of 4,000 units, how many of each product should be made?
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DBZ Company produces two products, Gamma and DBZ. Gamma is a high-volume item totaling 25,000 units annually. DBZ is a low-volume item totaling only 8,000 units per year. Gamma requires 1.5 hours of direct labor for completion, while each unit of DBZ requires 3 hours. Therefore, total annual direct labor hours are 55,500 (25,000 × 1.5 + 8,000 × 3). Expected annual manufacturing overhead costs are $720,000. DBZ uses a traditional costing system and assigns overhead based on direct labor hours. Each unit of DBZ would be assigned an overhead of: