Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Ice Cool produces two different models of air conditioners. The activities, costs, and cost drivers associated with the production processes follow. Budgeted Activity Process
Ice Cool produces two different models of air conditioners. The activities, costs, and cost drivers associated with the production processes follow. Budgeted Activity Process Assembly Activity Machining Budgeted Cost Activity Cost Driver Usage Setups $ 279,000 24,000 $ 303,000 Machine hours (MH) 6,000 Setups 120 Finishing Inspecting Support Purchasing $ 210,000 $135,000 Inspections 700 Purchase orders 450 Additional production information concerning its two models follows. Units and Activities Units produced Machine hours Setups Inspections Purchase orders Per Unit Model X Model Z 1,724 3,463 1,800 4,200 40 80 400 300 300 150 Selling price per unit Model X $ 420 Model Z $ 400 Direct materials cost per unit 100 90 Direct labor cost per unit 150 160 1. Compute the activity rate for each activity using activity-based costing. 2. Using activity-based costing, compute the overhead cost per unit for each model. 3. Compute the total product cost per unit for each model. 4. For each model, compute the gross profit per unit (selling price per unit minus product cost per unit).
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