Question
I'm stuck can I get some help with section b. please? Thank you. Elliot-Jones manufactures two large-screen television models. The 65-inch flat-panel LED model has
I'm stuck can I get some help with section b. please? Thank you.
Elliot-Jones manufactures two large-screen television models. The 65-inch flat-panel LED model has been in production since 2012 and sells for $900. The company introduced a 55-inch 4K ultra HD in 2016; it sells for $1,200. The company's income statement for the current year follows. Based on these results, management has decided to concentrate the company's marketing efforts on the 4K ultra HD model and begin to phase out the LED model.
Elliot-Jones Income Statement For the Year Ended December 31 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
65" LED | 55" 4K Ultra HD | Total | |||||||||
Sales Revenue | $ | 18,000,000 | $ | 6,000,000 | $ | 24,000,000 | |||||
Cost of goods sold | 11,800,000 | 4,015,500 | 15,815,500 | ||||||||
Gross profit | 6,200,000 | 1,984,500 | 8,184,500 | ||||||||
Selling and administrative expenses | 5,300,000 | 978,000 | 6,278,000 | ||||||||
Operating income | $ | 900,000 | $ | 1,006,500 | $ | 1,906,500 | |||||
Units produced and sold | 20,000 | 5,000 | |||||||||
Operating income per unit sold | $ | 45.00 | $ | 201.30 |
The unit costs for the two television models are as follows:
65" LED | 55" 4K Ultra HD | |||||||
Direct materials | $352.00 | $656.00 | ||||||
Direct labor | 18.00 | 42.00 | ||||||
Manufacturing overhead | 220.00 | 105.10 | ||||||
Total unit cost | $590.00 | $803.10 |
Mark Renn, Elliot-Jones' controller, just attended a seminar on activity-based costing and believes the company should implement such a system. He has gathered the following annual information to explore the possibility.
Number of Events | |||||||||
Activity Cost Pool | Cost Driver | Traceable Costs | 65" LED | 55" 4K Ultra HD | Total | ||||
Soldering | number of solder joints | $942,000 | 1,185,000 | 385,000 | 1,570,000 | ||||
Shipping | number of shipments | 860,000 | 16,000 | 4,000 | 20,000 | ||||
Quality control inspecting | number of inspections | 1,248,000 | 56,250 | 21,750 | 78,000 | ||||
Purchasing | number of orders | 1,050,000 | 65,000 | 110,000 | 175,000 | ||||
Machining | number of machine hours | 70,400 | 150,000 | 26,000 | 176,000 | ||||
Machine setups | number of setups | 750,000 | 11,000 | 14,000 | 25,000 | ||||
Total traceable costs | $4,920,400 |
(a)
Correct answer icon
Your answer is correct.
Calculate the activity rate for each activity cost pool. (Round answers to 2 decimal places, e.g. 15.25.)
Cost Pool | Activity Rate | |
---|---|---|
Soldering | 0.60 | $enter the activity rate per joint in dollars / joint |
Shipping | 43.00 | $enter the activity rate per shipment in dollars / shipment |
Quality control | 16.00 | $enter the activity rate per inspection in dollars / inspection |
Purchasing | 6.00 | $enter the activity rate per purchase order in dollars / purchase order |
Machining | 0.40 | $enter the activity rate per machine hour in dollars / machine hour |
Setups | 30.00 | $enter the activity rate per setup in dollars / setup |
(b)
Allocate overhead costs to each product using activity-based costing. (Round per unit answers to 2 decimal places, e.g. 15.25.)
Cost Pool | 65" LED | 55" 4K Ultra HD | |
---|---|---|---|
Soldering | $enter a dollar amount | $enter a dollar amount | |
Shipping | enter a dollar amount | enter a dollar amount | |
Quality control | enter a dollar amount | enter a dollar amount | |
Purchasing | enter a dollar amount | enter a dollar amount | |
Machining | enter a dollar amount | enter a dollar amount | |
Setups | enter a dollar amount | enter a dollar amount | |
$enter a total amount | $enter a total amount | ||
Units produced | enter the number of units produced | enter the number of units produced | |
OH per unit | $enter the overhead per unit amount in dollars rounded to 2 decimal places | $enter the overhead per unit amount in dollars rounded to 2 decimal places |
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