Question
Hello would you please help me understand this question I have difficulties understanding it especially part D 23) MTM Manufacturing produces two types of pre-fabricated
Hello would you please help me understand this question I have difficulties understanding it especially part D
23) MTM Manufacturing produces two types of pre-fabricated exterior walls:deluxe and standard. The assignment basis for overhead costs has been direct labor hours. For 2011, MTM compiled the following data for the two products:
DeluxeStandard
Sales in units5,00040,000
Sales price per unit$13,000.00$9,500.00
Direct material and direct labor costs per unit$3,600.00$2,600.00
Manufacturing overhead costs per unit$1,800,.00$2,400.00
Last year, MTM purchased an expensive robotics system to allow for more complex products in the deluxe line. The CFO suggested that an ABC analysis could be valuable to help evaluate a product mix and promotion strategy for the next sales campaign. She obtained the following ABC information for 2011:
ActivityCost DriverCostTotalDeluxe Standard
Setups# setups$1,300,000500400100
Machine-related# of machine hours $61,200,000600,000300,000300,000
Packing# shipments$105,000,000250,00050,000200,000
d.Using the activity-based costing data presented above,
1.compute the cost driver rate for each overhead activity.
2.compute the revised manufacturing overhead cost per unit for the deluxe wall.
3.compute the revised total cost to manufacture one unit of the deluxe wall.
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