I can't determine the gross profit per wheel for the ABC unit cost data, cost wheel if managers rely on plant wide allocation cost data, what product line is more profitable for the company, and why would the controller have to pass the cost benefit test?
Several years after reengineering its production process, Zeke Corporation hired a new controller, Christine Erickson. She developed an ABC system very similar to the one used by Zeke's chief rival. Part of the reason Erickson developed the ABC system was because Zeke's prots had been declining even though the company had shifted its product mix toward the product that had appeared most protable under the old system. Before adopting the newABC system, Zeke had used a plantwide overhead rate based on direct labor hours that was developed years ago. a (Click the icon to view the overhead costs and budgeted data.) Read the muirements. Requirement 1. Compute the gross prot per wheel if managers rely on the ABC unit cost data. (Enter amounts to two decimal places.) Begin by computing the total manufacturing cost per wheel for each wheel model. Zeke Corporation Total cost per unit using ABC data Standard Deluxe :I | | | Several years after reengineering its production process, Zeke Corporation hired a new controller, Christine Erickson. She developed an ABC system very similar to the one used by Zeke's chief rival. Part of the reason Erickson developed the ABC system was because Zeke's profits had been declining even though the company had shifted its product mix toward the product that had appeared most profitable under the old system. Before adopting the new ABC system, Zeke had used a plantwide overhead rate based on direct labor hours that was developed years ago. (Click the icon to view the overhead costs and budgeted data.) Read the requirements. Zeke Corporation Total cost per unit using ABC data Standard Deluxe Total manufacturing costuction i Data Table X e d reas een that ew that osts Manufacturing Overhead Costs per Unit Standard Deluxe ation ABC costs .. EA 253.00 $ 419.00 ing A Plantwide overhead .rate $ 273.00 $ 399.00 anda The following data are budgeted for the company's Standard and Deluxe models for next year: Standard Deluxe Sales. price per wheel . . . . . $ 430.00 $ 610.00 Direct materials. per. wheel . . . . . $ 33.00 $ 48.25 Direct labor .per . wheel. . . . . . $ 45.50 $ 53.00 er in Print Doneact the 0 Requirements 1. Compute the gross prot per wheel if managers rely on the ABC unit cost data. :st 2. Compute the gross prot per wheel if the managers rely on the plantwide allocation cost data. 3. Which product line is more protable for the company? 4. Why might the controller have expected ABC to pass the cost-benet test? Were there any warning signs that the company's old direct-laborbased allocation system was broken? 1ter any number in the input fields and then click Check
