Answered step by step
Verified Expert Solution
Question
1 Approved Answer
i only need help with #4 Koontz Company manufactures two models of industrial components-a Basic model and an Advanced Model. The company considers all of
i only need help with #4
Koontz Company manufactures two models of industrial components-a Basic model and an Advanced Model. The company considers all of its manufacturing overhead costs to be fixed and it uses plantwide manufacturing overhead cost allocation based on direct labor hours Koontz's controller prepared the segmented income statement that is shown below for the most recent year the allocated selling and administrative expenses to products based on sales dollars) Baske 20,000 Advanced 10.000 Total 30,000 umber of units produced and sold Sales Cost of woods sold Gross margin Selling and administrative expenses Niet operating income (101) $3,000,000 2.100.000 700,000 720,000 1 (20.000) 12,000,000 1.350.000 650.000 410.000 $ 170,000 $5,000,000 3.650.000 1,350,000 1.200.000 $ 150,000 Direct laborers are paid $20 per hout Direct materials cost $40 per unit for the Basic model and $60 per unit for the Advanced model Koontz is considering a change from plantwide overhead allocation to a departmental approach The overhead costs in the company's Molding Department would be allocated based on machine hours and the overhead costs in its Assembly and Pack Department would be allocated based on direct labor hours. To enable further analysis, the controller gathered the following information Molding $ 787,500 Assemble and Pack Total 5.562,500 $1,350,000 Manufacturing overhead costs Direct labor hours Basic Advanced Machine hours Basic Advanced 10,000 5.000 20,000 10,000 30,000 15,000 12,000 10,000 12.000 10,000 3. Koontz's production manager nas suggested using activity-based costing instead of either the plantwide or departmental approaches to factitate the necessary calculations, she assigned the company's total manufacturing overhead cost to five activity cost pools as follows Manufacturing Activity Cext Pool Activity sure Overhead Machining Machine-hour's In Holding 5417.500 Assemble and pack Direct labor hours in Assemble and Pack 202.500 Order processing Number of customer orders 230,000 Setups Setup hours 340.000 Other (unused capacity) 10.000 $1,350,000 She also determined that the average order size for the Basic and Advanced models is 400 units and 50 units, respectively The molding machines require a setup for each order One setup hour is required for each customer order of the Basic model and three hours are requred to setup for an order of the Advanced model The company pays a sales commissions of 5% for the Basic model and 10% for the Advanced model its traceable fixed advertising costs include $150.000 for the Basic model and $200,000 for the Advanced model the remainder of the company's selling and administrative costs are organization sustaining in nature Using the additional information provided by the production manager, calculate a An activity rate for each activity cost pool b. The total manufacturing overhead cost allocated to the Basic model and the Advanced model using the activity based approach c. The total selling and administrative cost traced to the Basic model and the Advanced model using the activity based approach 4 Using your activity based cost assignments from requirement 3 prepare a contribution format segmented income statement that is adapted from Exhibit 4B (Hint Organize all of the company's costs into three categories variable expenses, traceable fixed expenses. and common fixed expenses) 5. Using your contribution format segmented income statement from requirement 4 calculate the break-even point in dollar sales for the Advanced model Reg LA Reg 13 Red 2A Reg 20 Reg 20 Red SA Reg 30 Reg 3 Heg 4 Reg Using your activity-based cost assignments from requirement 3, prepare a contribution format segmented Income statement. (Round your intermediate calculations to 2 decimal places.) Koonte Company Income statement Total Hlasic Advanced Sales $5,000,000 $ 3.000.000 5.2.000.000 Variable expenses Direct materials 1.400.000 300 000 600.000 Direct labor 900.000 600,000 300,000 Machining 417.560 227,760 189,800 Assemble and pack 282.600 188.400 94 2003 Order processing 230.000 46,000 184.000 Total variable expenses 3.570 162 1.852. 160 1,368,000 Contribution margin 1.429 838 1,137 840 632.000 Traceableted expenses Selling and administrative 700,000 300,000 400 000 300.000 837840 400.000 $ 232.000 729,838 $ Total traceable fured expenses Segment margin Common fed expenses Selling and administrative Other 00 500 000 30.000 Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started