Question
Beach Chair Corporation makes two types of beach chairs, reclining and straight-back. The direct costs per unit of the two chairs are as follows: Reclining
Beach Chair Corporation makes two types of beach chairs, reclining and straight-back. The direct costs per unit of the two chairs are as follows:
Reclining chairs:
Direct Materials - $3
Direct Labour - $5
Straight-Back:
Direct Materials - $5
Direct Labour - $2
The company has no beginning inventory. During the year the company plans and makes 10,000 reclining chairs and 20,000 straight-back chairs. The company sells all of the reclining chairs for $20 each but only half of the straight back chairs for $18 each during the year. Budgeted and actual overhead costs during the year are $150,000.
a.
Calculate the operating profit using direct material dollars as the allocation base for the manufacturing
overhead.
b.
Calculate the operating profit using direct labor dollars as the allocation base for the manufacturing
overhead.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started