EyeGuard Equipment Incorporated (EEI) manufactures protective eyewear for use in commercial and home applications. The product is also used by hunters, home woodworking hobbyists, and in other applications. The firm has two main product lines the highest- quality product is called Safe-T and a low-cost, value version is called Safe V Information on the factory conversion costs for EEl is as follows Salaries Supplies Factory expense Total Factory Costs 5.842.000 242,000 542,000 $1,526,000 El uses ABC to determine the unit costs of its products. The firm uses resource consumption cost drivers based on rough estimates of the amount that each activity consumes as shown below. Eel has four activitiesjob setup, assembly, inspecting and finishing and packaging Eastern Chemical Company produces three products. The operating results of the current year are: Target Price $ 295.00 307.60 212.50 Actual Price $ 296.00 265.68 320.00 775 Sales Product Quantity Difference A 1,550 $ 1.00 B 7,750 (42.00) $ 107.50 The firm sets the target price of each product at 150% of the product's total manufacturing cost. It appears that the fire Product Cat a much higher price than the target price of the product and lost money on Product B. Tom Watson, CEO promote Product C much more aggressively and phase out Product B. He believes that the information suggests that the greatest potential among the firm's three products because the actual selling price of Product C was almost 50% 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 $727,900. The actual units sold for each produc same as the budgeted units. The firm uses direct labor dollars to assign manufacturing overhead costs. The direct mate labor costs per unit for each product are Direct materials Direct labor Total prine cost Product A 550.00 30.00 $ 0.00 Products 5124.45 22.00 $ 145.40 Products $75.00 15.50 $ 90.50 The controller noticed that not all products consumed factory overhead similarly Upon further investigation she identified following usage of factory overhead during the year EyeGuard Equipment Incorporated (EEI) manufactures protective eyewear for use in commercial and home applications. The product is also used by hunters, home woodworking hobbyists, and in other applications. The firm has two main product lines the highest- quality product is called Safe-T and a low-cost, value version is called Safe V Information on the factory conversion costs for EEl is as follows Salaries Supplies Factory expense Total Factory Costs 5.842.000 242,000 542,000 $1,526,000 El uses ABC to determine the unit costs of its products. The firm uses resource consumption cost drivers based on rough estimates of the amount that each activity consumes as shown below. Eel has four activitiesjob setup, assembly, inspecting and finishing and packaging Eastern Chemical Company produces three products. The operating results of the current year are: Target Price $ 295.00 307.60 212.50 Actual Price $ 296.00 265.68 320.00 775 Sales Product Quantity Difference A 1,550 $ 1.00 B 7,750 (42.00) $ 107.50 The firm sets the target price of each product at 150% of the product's total manufacturing cost. It appears that the fire Product Cat a much higher price than the target price of the product and lost money on Product B. Tom Watson, CEO promote Product C much more aggressively and phase out Product B. He believes that the information suggests that the greatest potential among the firm's three products because the actual selling price of Product C was almost 50% 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 $727,900. The actual units sold for each produc same as the budgeted units. The firm uses direct labor dollars to assign manufacturing overhead costs. The direct mate labor costs per unit for each product are Direct materials Direct labor Total prine cost Product A 550.00 30.00 $ 0.00 Products 5124.45 22.00 $ 145.40 Products $75.00 15.50 $ 90.50 The controller noticed that not all products consumed factory overhead similarly Upon further investigation she identified following usage of factory overhead during the year
