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I am only missing part b. Cain Components manufactures and distributes various plumbing products used in homes and other buildings. Over time, the production staff
I am only missing part b.
Cain Components manufactures and distributes various plumbing products used in homes and other buildings. Over time, the production staff has noticed that products they considered easy to make were difficult to sell at margins considered reasonable, while products that seemed to take a lot of staff time were selling well despite recent price increases. A summer intern has suggested that the cost system might be providing misleading information. The controller decided that a good summer project for the intern would be to develop, in one self-contained area of the plant, an alternative cost system with which to compare the current system. The intern identified the following cost pools and, after discussion with some plant personnel, appropriate cost drivers for each pool. There were: Activity Drivers Cost Pools Receiving Manufacturing Machine setup Shipping Costs $720,000 Direct material cost 5,750,000 Machine-hours 860,000 Production runs $ 1,650,000 Units shipped In this particular area, Cain produces two of its many products: Standard and Deluxe. The following are data for production for the latest full year of operations: Products Deluxe Total direct material costs Total direct labor costs Total machine-hours Total number of setups Total pounds of material Total direct labor-hours Number of units produced and shipped Standard $285,000 $730,000 150,000 80 22,000 8,000 25,000 $195,000 S330,000 100,000 135 11,000 5,000 5,000 Required a. The current cost accounting system charges overhead to products based on machine-hours.What unit product costs will be reported for the two products if the current cost system continues to be used? (Do not round intermediate calculations.) Standard Deluxe $1,015,000525,000 3,592,000 Total costs$6,403,000 4,117,000 5,000 823.40 Direct costs Overhead 5,388,000 25,000 256.12 $ Number of units Unit costStep by Step Solution
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