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Hello there! Can you help me complete this Simple Costing Question? Please show the work so I can fully understand the process. THANK YOU!!! Simple
Hello there! Can you help me complete this Simple Costing Question? Please show the work so I can fully understand the process. THANK YOU!!!
Simple Costing Example: Go Fast Inc. Go Fast Inc. manufactures two performance go-kart engine products: turbochargers and superchargers. Direct materials for each turbocharger and supercharger are $18.75 and $45.00 respectively. It takes 0.5 labour hours to manufacture one turbocharger and 0.65 labour hours to manufacture one supercharger. The company's direct labour rate is $20.00 per hour. For 2022 , the company is planning to manufacture 60,000 turbochargers and 15,000 superchargers at a total manufacturing overhead cost of $2,385,000. For 2022, Go Fast Inc. is planning to sell each turbocharger for $63 and each supercharger for $137 to Mario Cart Ltd. However, Mario Cart Ltd. has informed Go Fast Inc. that a new supplier, Go Faster Inc., is offering to supply turbochargers for $53 each. Unless Go Fast Inc. can lower its selling price, Mario Cart Ltd. will not purchase turbochargers. Fortunately, there are no competitive pressures for superchargers. Go Fast Inc. has two options: (a) forgo turbocharger sales if management deems that the product line is unprofitable or (b) reduce the price of turbochargers and accept a lower margin or aggressively seek to reduce costs. In order to make a long-term strategic decision, Donkey Kong, President, needs a thorough understanding of total cost and unit cost for both turbochargers and superchargers. Go Fast Inc. currently uses a simple costing system where manufacturing overhead is allocated on a single allocation base -- direct labour hours. Using the company's current costing system, what is the total cost and the unit cost of each product line? Simple Costing Example: Go Fast Inc. Simple Costing Example: Go Fast Inc
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