Concept explainers
Use the following information for Short Exercises S21A-20 and S21A-21.
Matthew Company had the following costs:
Units produced 310 units
Direct materials $76 per unit
Direct labor 33 per unit
Variable manufacturing
Fixed manufacturing overhead 6,200 per year
Variable selling and administrative costs 20 per unit
Fixed selling and administrative costs 3,100 per year
S21A-20 Computing unit product cost, absorption costing
Calculate the unit product cost using absorption costing. Round your answer to the nearest cent.
S21A-21 Computing unit product cost, variable costing
Calculate the unit product cost using variable costing. Round your answer to the nearest cent.
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Evanss Miami plant produces 10 different electronic products. The demand for each product is about the same. Although they differ in complexity, each product uses about the same labor time and materials. The plant has used direct labor hours for years to assign overhead to products. To help design engineers understand the assumed cost relationships, the Cost Accounting Department developed the following cost equation. (The equation describes the relationship between total manufacturing costs and direct labor hours; the equation is supported by a coefficient of determination of 60 percent.) Y=5,000,000+30X,whereX=directlaborhours The variable rate of 30 is broken down as follows: Because of competitive pressures, product engineering was given the charge to redesign products to reduce the total cost of manufacturing. Using the above cost relationships, product engineering adopted the strategy of redesigning to reduce direct labor content. 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For example, setting up equipment is a step-fixed cost, where each step is 2,000 setup hours, costing 90,000. The study also revealed that the cost of receiving goods is a function of the number of different components. This activity has a variable cost of 2,000 per component type and a fixed cost that follows a step-cost pattern. The step is defined by 20 components with a cost of 50,000 per step. Assume also that the consultant indicated that the design adopted by the engineers increased the demand for setups from 20,000 setup hours to 40,000 setup hours and the number of different components from 100 to 250. The demand for other non-unit-level activities remained unchanged. The consultant also recommended that management take a look at a rejected design for its products. 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