Question
Answer A &B&C USING CHARTS Lock-Tite Company Jobs Report Traditional OH allocation (Direct Labor Dollars) Year Ending December 31 JV28 BY92 ZF14 Sales Revenue 132,800
Answer A &B&C USING CHARTS
Lock-Tite Company
Jobs Report Traditional OH allocation (Direct Labor Dollars)
Year Ending December 31
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| JV28 | BY92 | ZF14 |
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Sales Revenue |
| 132,800 | 99,600 | 92,960 | Calculated in 7e) |
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Job Costs: |
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Direct Material |
| 26,560 | 19,920 | 13,280 | From 7a) |
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Direct Labor |
| 7,842 | 5,882 | 5,882 | From 7b) |
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Overhead |
| 4,313 | 3,235 | 3,235 | From 7c) |
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Total Job Costs |
| 38,715 | 29,037 | 22,397 |
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Gross Margin |
| 70.85 | 70.85 | 75.91 |
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Gross Margin % |
| 53% | 71% | 82% |
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Lock-Tite Company |
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Job Report ABC |
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| JV28 | BY92 | ZF14 | |
Sales Revenue |
| 132,800 | 99,600 | 92,960 | |
Job Costs: |
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Direct Material |
| 26,560 | 19,920 | 13,280 | |
Direct Labor |
| 7,842 | 5,882 | 5,882 | |
Overhead from 8 |
| 36,330 | 29,420 | 37,761 | |
Total Job Costs |
| 70,732 | 55,222 | 56,923 | |
Gross Margin |
| 0.47 | 0.45 | 0.39 | |
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Gross Margin % |
| 47% | 45% | 39% |
- Comparing the Gross Margin percentages of the jobs under the Activity Based Costing system, which job is more attractive for Lock-Tite to sell? Could the company be overcharging their customers for this job? Explain using complete sentences and 30 to 50 words.
- b. Do you think the companys policy of using a factor times direct material costs to set selling prices is a good policy? What would change if they used total costs to establish selling prices? What other information might be helpful to make this decision. Make sure you explain your answer using full sentences and 30 to 50 words.
- c.Should Lock-Tite Company switch to ABC method? Explain how it may or may not help manage their company. Use complete sentences and 30 to 50 words.
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