Refer to the product costs developed in requirement (5) of Problem 5-46. Prepare a table showing how Gigabyte's traditional, volume-based product-costing system distorts the product costs of gismos, thingamajigs, and whatchamacallits.

Data From Problem 5-46:-

Gigabyte, Inc. manufactures three products for the computer industry:

The company uses a traditional, volume-based product-costing system with manufacturing overhead applied on the basis of direct-labor dollars. The product costs have been computed as follows:

Gigabyte's pricing method has been to set a target price equal to 150 percent of full product cost.
However, only the thingamajigs have been selling at their target price. The target and actual current prices for all three products are the following:

Gigabyte has been forced to lower the price of gismos in order to gel orders. In contrast, Gigabyte has raised the price of whatchamacallits several times, but there has been no apparent loss of sales.
Gigabyte, Inc. has been under increasing pressure to reduce the price even further on gismos. In contrast.
Gigabyte's competitors do not seem to be interested in the market for whatchamacallits. Gigabyte apparently has this market to itself.

Transcribed Image Text:

Gismos (product G): annual sales, 8,000 units Thingamajigs (product T): annual sales, 15,000 units Whatchamacallits (product W): annual sales, 4,000 units