Question
Funfetti inc has two product lines: frosting and cake.These product lines are customizable.total Manufacturing Overhead$60,000The company is trying to decide if they should use one
Funfetti inc has two product lines: frosting and cake.These product lines are customizable.total Manufacturing Overhead$60,000The company is trying to decide if they should use one MOH rate or ABC.If they use one MOH rate, it would be based on square footage.If they use ABC, the company would have two cost pools.the machine setup pool would be assigned $10,000 andand the inspection cost pool would be assigned $50,000.Additional information about each product line is shown below.Frosting lineCake linesales revenue$240,000$160,000Direct materials$100,000$90,000Direct labor$72,000$48,000units produced48,00016,000Square footage1,2008002,000Machine setups150100250Quality control inspection hours2,0005002,5001.Assume that one MOH rate is used.Frosting MOH:Cake line MOH:A.Total MOH assigned to each product line(6pts)B.Calculate all manufacturing costs per unit for Frosting and Cake batter lines.Frosting cost per unit:(2pts)Cake line per unit:(2pts)2.Assume ABC is used,Allocate the total OH for each cost pool to each product line.The activity base is machine setups for machine setup cost pool.The activity base is inspection hours for inspection cost pool.A.Frosting MOH:(4pts)Cake line MOH:(4pts)Machine setup cost poolInspections cost poolB.Calculate all manufacturing costs per unit for Frosting and Cake batter lines.Frosting cost per unit(2pts)Cake line per unit(2pts)C.Show the profit per line to determine which line is more profitable.Frosting line per unit:(3pts)Cake batter line per unit(3pts)3.Explain why ABC might be a better method for this company(at least 2 items) (5pts)Assume other similar companies are selling their frosting line for $6.60 and cake batter line for $13.75...What do you recommend for a new price if the company wants a 50% mark up on the cost.(2pts)FrostingCake batter
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