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Edlie Accessories (EA) makes travel bags, both for sale under their own label (Branded) and for other resellers to put their label on the bags

Edlie Accessories (EA) makes travel bags, both for sale under their own label ("Branded") and for other resellers to put their label on the bags ("Private-Label"). The bags sold through the two channels are similar, but they differ slightly in the quality of materials and detail in the manufacturing process.

The manufacturing plant at EA has two departments. Department A-101 was the original manufacturing facility and many of the machines are original. Department A-102 is new, with state-of-the-art equipment. The new equipment facilitates the additional care taken with the Branded product.

The following information presents financial results for the two models from last year:

Private Label Branded Total
Sales revenue $ 768,000 $ 480,000 $ 1,248,000
Direct material 216,000 156,000 372,000
Direct labor 144,000 96,000 240,000
Manufacturing overhead
Department A-101 $ 201,600
Department A-102 230,400
Total overhead $ 432,000

The product costing system at EA allocates manufacturing overhead on the basis of direct labor costs.

Required:

a. Compute the profit or loss for each product using plantwide allocation.

b. Compute the profit or loss for each product using department allocation.

Note: For all requirements, loss amounts should be indicated by a minus sign.

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