Edlie Accessories (EA) makes travel bags, both for sale under their own label (Branded) and for...
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Edlie Accessories (EA) makes travel bags, both for sale under their own label ("Branded") and for other resellers to put their label on the bags ("Private-Label"). The bags sold through the two channels are similar, but they differ slightly in the quality of materials and detail in the manufacturing process. The manufacturing plant at EA has two departments. Department A-101 was the original manufacturing facility and many of the machines are original. Department A-102 is new, with state-of-the-art equipment. The new equipment facilitates the additional care taken with the Branded product. The following information presents financial results for the two models from last year: Sales revenue Direct material Direct labor Manufacturing overhead Department A-101 Department A-102 Private Label $ 808,000 256,000 184,000 Branded $ 640,000 192,000 132,000 Total $ 1,448,000 448,000 316,000 $ 241,600 327,200 Total overhead $ 568,800 The product costing system at EA allocates manufacturing overhead on the basis of direct labor costs. Required: a. Compute the profit or loss for each product using plantwide allocation. b. Compute the profit or loss for each product using department allocation. Note: For all requirements, loss amounts should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers rounded to the nearest whole number. a. Using plantwide allocation b. Using department allocation Profit or Loss Private Label Branded Edlie Accessories (EA) makes travel bags, both for sale under their own label ("Branded") and for other resellers to put their label on the bags ("Private-Label"). The bags sold through the two channels are similar, but they differ slightly in the quality of materials and detail in the manufacturing process. The manufacturing plant at EA has two departments. Department A-101 was the original manufacturing facility and many of the machines are original. Department A-102 is new, with state-of-the-art equipment. The new equipment facilitates the additional care taken with the Branded product. The following information presents financial results for the two models from last year: Sales revenue Direct material Direct labor Manufacturing overhead Department A-101 Department A-102 Private Label $ 808,000 256,000 184,000 Branded $ 640,000 192,000 132,000 Total $ 1,448,000 448,000 316,000 $ 241,600 327,200 Total overhead $ 568,800 The product costing system at EA allocates manufacturing overhead on the basis of direct labor costs. Required: a. Compute the profit or loss for each product using plantwide allocation. b. Compute the profit or loss for each product using department allocation. Note: For all requirements, loss amounts should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers rounded to the nearest whole number. a. Using plantwide allocation b. Using department allocation Profit or Loss Private Label Branded
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