Manchester Technology, Inc. manufactures several different types of printed circuit boards; however, two of the boards account for the majority of the company's sales. The first of these boards, a television circuit board, has been a standard in the industry for several years. The market for this type of board is competitive and price-sensitive. Manchester plans to sell 69,000 of the TV boards in 20x1 at a price of $430 per unit. The second high-volume product, a personal computer circuit board, is a recent addition to Manchester's product line. Because the PC board incorporates the latest technology, it can be sold at a premium price. The 20x1 plans include the sale of 44,000 PC boards at $750 per unit.

Manchester's management group is meeting to discuss how to spend the sales and promotion dollars for 20x1. The sales manager believes that the market share for the TV board could be expanded by concentrating Manchester's promotional efforts in this area. In response to this suggestion, the production manager said, "Why don't you go after a bigger market for the PC board? The cost sheets that I get show that the contribution from a PC board is significantly larger than the contribution from a TV board. I know we get a premium price for the PC board. Selling it should help overall profitability."

The cost-accounting system shows that the following costs apply to the PC and TV boards.

Manchester Technology, Inc. manufactures several different types of printed circuit boards; however, two of the boards account for the majority of the company's sales. The first of these boards, a television circuit board, has been a standard in the industry for several years. The market for this type of board is competitive and price-sensitive. Manchester plans to sell 69,00 of the TV boards in 20x1 at a price of $430 per unit. The second high-volume product, a personal computer circuit board, is a recent addition to Manchester's product line. Because the PC board incorporates the latest technology, it can be sold at a premium price. The 20x1 plans include the sale of 44,000 PC boards at $750 per unit. Manchester's management group is meeting to discuss how to spend the sales and promotion dollars for 20x1. The sales manager believes that the market share for the TV board could be expanded by concentrating Manchester's promotional efforts in this area. In response to this suggestion, the production manager said, "Why don't you go after a bigger market for the PC board? The cost sheets that I get show that the contribution from a PC board is significantly larger than the contribution from a TV board. I know we get a premium price for the PC board. Selling it should help overall profitability." The cost-accounting system shows that the following costs apply to the PC and TV boards. Direct material PC Board TV Board $223 $143 Direct labor 3.5 hr 1.5 hr . 1.0 hr. Machine time 1.0 hr. Variable manufacturing overhead is applied on the basis of direct-labor hours. For 20x1, variable overhead is budgeted at $2,300,000, and direct-labor hours are estimated at 234, 150. The hourly rates for machine time and direct labor are $28 and $36, respectively. The company applies a material-handling charge at 10 percent of material cost. This material-handling charge is not included in variable manufacturing overhead. Total 20x1 expenditures for direct material are budgeted at $19,679,000. Andrew Fulton, Manchester's controller, believes that before the management group proceeds with the discussion about allocating sales and promotional dollars to individual products, it might be worthwhile to look at these products on the basis of the activities involved in their production. Fulton has prepared the following schedule to help the management group understand this concept. "Using this information," Fulton explained, "we can calculate an activity-based cost for each TV board and each PC board and then compare it to the standard cost we have been using. The figures." only cost that remains the same for both cost methods is the cost of direct material. The cost drivers will replace the direct labor, machine time, and overhead costs in the old standard cost Budgeted Cost Budgeted Annual Activity for Cost Driver Cost Driver Procurement $ 840,000 Production scheduling 460,000 Number of parts 920,000 Number of boards 5,084,100 parts 118,650 board Packaging and shipping Number of boards 118,650 boards Total $ 2,220,000 Machine setup $ 908,000 Hazardous waste disposal Number of setups Quality control 104,000 283,500 setups 144,000 Pounds of waste 32,067 pounds General supplies 144,000 Number of inspections 283,500 inspections Number of boards 118,650 boards Total $ 2,300,000 Machine insertion $ 2,600,000 Manual insertion 8.400,000 Number of parts 3,681,000 parts 1,310,000 parts Wave-soldering 284,000 Number of parts Number of boards 118,650 boards Total $ 11,284,000 Required per Unit PC Board TV Board Parts: 30 Machine insertions 63 Manual insertions 40 29 Machine setups Hazardous waste disposal, in lb. Inspections w 8 w Required: 1. Identify at least four general advantages associated with activity-based costing. 2. On the basis of Manchester's unit cost data given in the problem, calculate the total amount that each of the two product lines will contribute toward covering fixed costs and profit in 20x1. 3. Using activity-based costing, calculate the total amount that each of the two product lines will contribute toward covering fixed costs and profit in 20x1. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 On the basis of Manchester's unit cost data given in the problem, calculate the total amount that each of the two product lines will contribute toward covering fixed costs and profit in 20x1. (Round your intermediate calculations to 2 decimal places.) PC Board TV Board Total contribution margin Manchester Technology, Inc. manufactures several different types of printed circuit boards; however, two of the boards account for the majority of the company's sales. The first of these boards, a television circuit board, has been a standard in the industry for several years. The market for this type of board is competitive and price-sensitive. Manchester plans to sell 69,000 of the TV boards in 20x1 at a price of $430 per unit. The second high-volume product, a personal computer circuit board, is a recent addition to Manchester's product line. Because the PC board incorporates the latest technology, it can be sold at a premium price. The 20x1 plans include the sale of 44,000 PC boards at $750 per unit. Manchester's management group is meeting to discuss how to spend the sales and promotion dollars for 20x1. The sales manager believes that the market share for the TV board could be expanded by concentrating Manchester's promotional efforts in this area. In response to this suggestion, the production manager said, "Why don't you go after a bigger market for the P board? The cost sheets that I get show that the contribution from a PC board is significantly larger than the contribution from a TV board. I know we get a premium price for the PC board Selling it should help overall profitability." The cost-accounting system shows that the following costs apply to the PC and TV boards. PC Board TV Board Direct material $223 $143 Direct labor 3.5 hr. 1.0 h Machine time 1.5 hr. 1.0 hr. Variable manufacturing overhead is applied on the basis of direct-labor hours. For 20x1, variable overhead is budgeted at $2,300,000, and direct-labor hours are estimated at 234,150. The hourly rates for machine time and direct labor are $28 and $36, respectively. The company applies a material-handling charge at 10 percent of material cost. This material-handling charge is not included in variable manufacturing overhead. Total 20x1 expenditures for direct material are budgeted at $19,679,000. Andrew Fulton, Manchester's controller, believes that before the management group proceeds with the discussion about allocating sales and promotional dollars to individual products, it might be worthwhile to look at these products on the basis of the activities involved in their production. Fulton has prepared the following schedule to help the management group understand this concept. "Using this information," Fulton explained, "we can calculate an activity-based cost for each TV board and each PC board and then compare it to the standard cost we have been using. The only cost that remains the same for both cost methods is the cost of direct material. The cost drivers will replace the direct labor, machine time, and overhead costs in the old standard cost figures." Budgeted Cost Cost Driver Budgeted Annual Activity for Cost Driver Procurement $ 840,000 Number of parts 5,084,100 parts Production scheduling 460,00 Packaging and shipping 920,000 Number of board Number of boards 118,650 boards 118,650 boards Total $ 2,220,000 Machine setup $ 908,000 Number of setups 283,500 setups Hazardous waste disposal 104,000 Quality control ,144,000 Pounds of waste 32,067 pounds Number of inspections 283,500 inspections General supplies 144,000 Number of boards 118,650 boards Total $ 2,300,000 Machine insertion $ 2.600,000 Number of parts Manual insertion 8,400,000 3,681,000 parts Number of parts 1,310,000 parts Wave-soldering 284,000 Number of boards 118,650 boards Total $11,284,000 Required per Unit PC Board TV Board Parts: 30 Machine insertions 63 23 29 Manual insertions 40 Machine setups Hazardous waste disposal, in lb. .06 Inspections w 8 Required: 1. Identify at least four general advantages associated with activity-based costing. 2. On the basis of Manchester's unit cost data given in the problem, calculate the total amount that each of the two product lines will contribute toward covering fixed costs and profit in 20x1. 3. Using activity-based costing, calculate the total amount that each of the two product lines will contribute toward covering fixed costs and profit in 20x1. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Using activity-based costing, calculate the total amount that each of the two product lines will contribute toward covering fixed costs and profit in 20x1. (Round your intermediate calculations to 2 decimal places.) PC Board TV Board Total contribution margin