Cost Distortion; Continuation of Preceding Case

(LO 5-2, 5-5)

Traditional system undercosts Deluxe Model by $222.75 per unitRefer to the product costs developed in requirement (2) of the preceding case. Prepare a table showing how Morelli Electric Motor Corporation’s traditional, volume-based product-costing system distorts the product costs of the standard, deluxe, and heavy-duty models. (You may wish to refer to Exhibit 5–10 for guidance. Because of rounding in the calculation of the product costs, there will be a small rounding error in this cost distortion analysis as well.)