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I need help calculating the gross margin per unit. please show the calculations as well. thank you Preston Electronics, a division of Batton Corporation, manufactures
I need help calculating the gross margin per unit. please show the calculations as well. thank you
Preston Electronics, a division of Batton Corporation, manufactures two large-screen television models: the Mammoth, which has been produced since 2017 and sells for $958, and the Maximum, a newer model introduced in early 2019 that sells for $1,303. (Click the icon to view the income statement.) a .) Preston's controller, Sam Jamison, is advocating the use of activity-based costing and activity-based management and has gathered information about the company's manufacturing overhead costs for the year ended November 30, 2021. After completing his analysis, Jamison shows the results to Curt Campbell, the Preston division president. (. (Click the icon to view the ABC data.) (Click the icon to view Campbell's response.) ) Required Indirect costs Soldering $ 862,500 $ 202,500 Shipments 805,100 455,900 Quality control 859,010 281,990 Purchase orders 516,000 654,000 Machine power 52,710 4,290 Machine setups 587,400 658,600 Total indirect costs $ 3,682,720 $ 2,257,280 $ Total cost of goods sold 13,354,720 $ 6,835,280 Now calculate the total gross margin and gross margin per unit for each model using activity-based costing. {Round the per unit amounts to the nearest cent.) Mammoth Maximum 9637280 982720 Gross margin-total Gross margin per unit x Income statement Based on the following income statement for the year ended November 30, 2021, senior management at Batton have decided to concentrate Preston's marketing resources on the Maximum model and to begin to phase out the Mammoth model because Maximum generates a much bigger operating income per unit. Preston Electronics Income Statement for the Fiscal Year Ended November 30, 2021 Mammoth Maximum Total Revenues 22,992,000 $ 14,952,000 7,818,000 $ 5,238,000 30,810,000 20,190,000 Cost of goods sold Gross margin Selling and administrative expense 8,040,000 5,748,000 2,580,000 1,563,600 10,620,000 7,311,600 $ 2,292,000 $ 1,016,400 $ 3,308,400 Operating income Units produced and sold Operating income per unit sold 24,000 6,000 $ 95.50 $ 169.40 Details for cost of goods sold for Mammoth and Maximum are as follows. Mammoth Maximum Operating income per unit sold 95.50 $ 169.40 Details for cost of goods sold for Mammoth and Maximum are as follows. Mammoth Maximum Total Per Unit Total Per Unit 5,476,800 $ 228.20 $ 3,855,600 $ 642.60 Direct materials Direct manufacturing labour (a) 18.00 42.00 432,000 3,763,200 252,000 470,400 156.80 78.40 Machine costs (b) Total direct costs 9,672,000 $ 403.00 $ 4,578,000 $ 763.00 220.00 5,280,000 Manufacturing overhead costs 110.00 (c) 660,000 $ 14,952,000 $ 623.00 $ 5,238,000 $ 873.00 Total cost of goods sold (a) Mammoth requires 1.5 hours per unit and Maximum requires 3.5 hours per unit. The direct manufacturing labour cost is $12.00 per hour. (b) Machine costs include lease costs of the machine, repairs, and maintenance. Mammoth requires 8 machine-hours per unit and Maximum requires 4 machine-hours per unit. The machine-hour rate is $19.60 per hour. (c) Manufacturing overhead costs are allocated to products based on machine-hours at the rate of $27.50 per hour. ABC data Units of the Cost-Allocation Base Mammoth Maximum Total 270,000 1,150,000 16,600 1,420,000 26,000 9,400 52,700 17,300 70,000 Activity Centre (Cost-Allocation Base) Total Activity Costs Soldering (number of solder points) $ 1,065,000 Shipments (number of shipments) 1,261,000 Quality control (number of inspections) 1,141,000 Purchase orders (number of orders) 1,170,000 Machine power (machine-hours) 57,000 Machine setups (number of setups) 1,246,000 $ 5,940,000 Total manufacturing overhead 86,000 109,000 195,000 175,700 14,300 190,000 16,500 18,500 35,000 Preston Electronics, a division of Batton Corporation, manufactures two large-screen television models: the Mammoth, which has been produced since 2017 and sells for $958, and the Maximum, a newer model introduced in early 2019 that sells for $1,303 (Click the icon to view the income statement.) Preston's controller, Sam Jamison, is advocating the use of activity-based costing and activity-based management and has gathered information about the company's manufacturing overhead costs for the year ended November 30, 2021. After completing his analysis, Jamison shows the results to Curt Campbell, the Preston division president. ( Click the icon to view the ABC data.) (Click the icon to view Campbell's response.) ) Required Requirement 1. Using activity-based costing, calculate the gross margin per unit of the Maximum and Marnmoth models. Begin by calculating the total cost of goods sold for each model. (Round intermediary calculations to the nearest cent.) Mammoth Maximum Direct costs Direct materials $ 5.476,800 S Direct manufacturing labour 432,000 3.763 200 3,655,600 252,000 470,400 Machine costs $ 9.672,000 S 4,578,000 Total direct costs Indirect costs $ 862,500 S Soldering Shipments Quality control 202,500 455.900 805,100 859,010 281,990 654,000 516,000 Purchase orders KA 59 710 4900Step by Step Solution
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