Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Eastern Chemical Company produces three products. The operating results of the current year are: Product Sales Quantity Target Price Actual Price Difference A 1,700 $

Eastern Chemical Company produces three products. The operating results of the current year are: Product Sales Quantity Target Price Actual Price Difference A 1,700 $ 298.00 $ 299.00 $ 1.00 B 8,500 310.60 268.60 (42.00) C 850 215.50 323.00 $ 107.50 The firm sets the target price of each product at 150% of the products total manufacturing cost. It appears that the firm was able to sell Product C at a much higher price than the target price of the product and lost money on Product B. Tom Watson, CEO, wants to promote Product C much more aggressively and phase out Product B. He believes that the information suggests that Product C has the greatest potential among the firms three products because the actual selling price of Product C was almost 50% higher than the target price, while the firm was forced to sell Product B at a price below the target price. Both the budgeted and actual factory overhead for the current year are $787,600. The actual units sold for each product also are the same as the budgeted units. The firm uses direct labor dollars to assign manufacturing overhead costs. The direct materials and direct labor costs per unit for each product are: Product A Product B Product C Direct materials $ 63.00 $ 127.40 $ 78.00 Direct labor 33.00 25.00 17.00 Total prime cost $ 96.00 $ 152.40 $ 95.00 The controller noticed that not all products consumed factory overhead similarly. Upon further investigation, she identified the following usage of factory overhead during the year: Product A Product B Product C Total Overhead Number of setups 5 8 6 $ 8,600 Weight of direct materials (pounds) 413 263 363 187,000 Waste and hazardous disposals 38 58 43 425,000 Quality inspections 43 48 48 88,000 Utilities (machine hours) 3,400 8,300 1,700 79,000 Total $ 787,600 Required: 1. Determine the manufacturing cost per unit for each of the products using the volume-based method. 2. What is the least profitable and the most profitable product under both the current and the ABC systems? 3. What is the new target price for each product based on 150% of the new costs under the ABC system? Compare this price with the actual selling price.

I have product A and B cost. I cant figure out Product C for Required 1 and 3

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Accounting 2

Authors: OpenStax

1st Edition

0357366808, 9780357366806

More Books

Students also viewed these Accounting questions

Question

What is cultural tourism and why is it growing?

Answered: 1 week ago

Question

Explain the multicultural organization development (MCOD) process.

Answered: 1 week ago