Atlas Company makes two types of beauty products - SoftSkin and GlowSkin. Data concerning these two product lines appear below: SoftSkin GlowSkin Selling Price per unit Direct Materials per Unit Direct Labor per unit Estimated annual production and sales $300.00 $120.00 $140.00 25,000 units $400 $150.00 $180.00 64,000 units The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours (Each unit of SoftSkin requires 0.80 direct labor hours while each unit of GlowSkin requires 1.25 direct labor hours) and the cost per direct labor hour is S40. Data concerning manufacturing overhead for the upcoming year appear below: Management Salaries Vehicle Expenses Machine Depreciation Office Supplies Administrative Expenses Estimated total manufacturing overhead S 1,800,000 500,000 1,000,000 100,000 600,000 $4,000,000 The company is considering replacing its traditional costing system with an activity-based costing system that would assign its manufacturing overhead to the following five activity cost pools (the Other cost pool includes organization- sustaining costs and idle capacity costs) Activity Cost Pool Total Cost Supporting direct labor $ 1,400,000 Number of Direct labor-hours ??? DLHs??? DLHs??? DLHs Batch setup:s Machining Product sustainingS 400,000 Number of Products Other Activity Measure Total Activity SoftSkin GlowSkin S 800,000 Number of setups S 1,200,000 Number of Machine Hours 500 1,000 400 100 S 200,000 Organization sustaining NA S 4,000,000 NA NA TOTAL REQUIRED I. TRADITIONAL COSTING Compute the predetermined overhead rate Compute the product cost per unit for SoftSkin and GlowSkin products under the company's traditional costing system. Using the price per unit given above, and the cost per unit you computed, calculate the product margin per unit and the product margin percent per unit for SoftSkin and GlowSkin a. b. C. Il. ABC COSTING Compute the activity rates in each of the cost pools Compute the product cost per unit for SoftSkin and GlowSkin products under the activity-based costing system. Using the price per unit given above, and the cost per unit you computed, calculate the product margin per unit and the product margin percentage per unit for SoftSkin and GlowSkin a. b. c. Atlas Company makes two types of beauty products - SoftSkin and GlowSkin. Data concerning these two product lines appear below: SoftSkin GlowSkin Selling Price per unit Direct Materials per Unit Direct Labor per unit Estimated annual production and sales $300.00 $120.00 $140.00 25,000 units $400 $150.00 $180.00 64,000 units The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours (Each unit of SoftSkin requires 0.80 direct labor hours while each unit of GlowSkin requires 1.25 direct labor hours) and the cost per direct labor hour is S40. Data concerning manufacturing overhead for the upcoming year appear below: Management Salaries Vehicle Expenses Machine Depreciation Office Supplies Administrative Expenses Estimated total manufacturing overhead S 1,800,000 500,000 1,000,000 100,000 600,000 $4,000,000 The company is considering replacing its traditional costing system with an activity-based costing system that would assign its manufacturing overhead to the following five activity cost pools (the Other cost pool includes organization- sustaining costs and idle capacity costs) Activity Cost Pool Total Cost Supporting direct labor $ 1,400,000 Number of Direct labor-hours ??? DLHs??? DLHs??? DLHs Batch setup:s Machining Product sustainingS 400,000 Number of Products Other Activity Measure Total Activity SoftSkin GlowSkin S 800,000 Number of setups S 1,200,000 Number of Machine Hours 500 1,000 400 100 S 200,000 Organization sustaining NA S 4,000,000 NA NA TOTAL REQUIRED I. TRADITIONAL COSTING Compute the predetermined overhead rate Compute the product cost per unit for SoftSkin and GlowSkin products under the company's traditional costing system. Using the price per unit given above, and the cost per unit you computed, calculate the product margin per unit and the product margin percent per unit for SoftSkin and GlowSkin a. b. C. Il. ABC COSTING Compute the activity rates in each of the cost pools Compute the product cost per unit for SoftSkin and GlowSkin products under the activity-based costing system. Using the price per unit given above, and the cost per unit you computed, calculate the product margin per unit and the product margin percentage per unit for SoftSkin and GlowSkin a. b. c
