=+7-26 KKK Target prices, target costs, value engineering, cost incurrence, locked-in costs, activitybased costing OBJECTIVES 1, 3,

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=+7-26 KKK Target prices, target costs, value engineering, cost incurrence, locked-in costs, activitybased costing OBJECTIVES 1, 3, 4 Sounds Ltd makes a radio-CD player, CP99, which has 80 components. Sounds Ltd sells 7000 units each month for $70 each.

The costs of manufacturing CP99 are $45 per unit, or $315000 per month. Monthly manufacturing costs incurred are:

Direct materials costs $182 000 Direct manufacturing labour costs 28 000 Machining costs (fixed) 31 500 Testing costs 35 000 Rework costs 14 000 Ordering costs 3 360 Engineering costs (fixed) 21 140 Total manufacturing costs $315 000 Sounds Ltd management identifies the activity cost pools, the cost driver for each activity and the cost per unit of the cost driver for each overhead cost pool as follows:

Manufacturing activity Description of activity Cost driver Cost per unit of cost driver 1 Machining costs Machining components Machine-hour capacity $4.50 per machine-hour

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Related Book For  book-img-for-question

Cost Accounting A Managerial Emphasis

ISBN: 9781442563377

2nd Edition

Authors: Monte Wynder, Madhav V. Rajan, Srikant M. Datar, Charles T. Horngren, William Maguire, Rebecca Tan

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