Manchester Technology. Incorporated, manufactures several different types of printed circuit boards. however, two of the boards account for the majorty 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 68,000 of the TV boards in 201 at a price of $165 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 201 plans include the sale of 43,000PC boards at $315 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 mantager said. "Why don t you go after a biggec market for the PC board? The cost sheets that 1 get show that the contribution from a PC board is significantly larger than the contribution from a TV board. 1 know we get a premium price for the PC board Selling it should help overall profitability" The cost-accourting system shows that the following costs apply to the PC and TV bourds. Varable manufacturing overhead is applied on the basis of direct-labor hours. For 20xt, variable overheisd is budgeted at 51.120 .600 \). and direct-labor hours are estimated at 280150. The hourly rates for machine ime and direct labor are 510 and 514 , respectively. The company applies a material.handing charge at 10 peicent of matetial cost. This material-handling charge is not included in variable manufacturing overheod. Totat 201 expenditures for direct material ore budgeted at $11610,000 Andiea Fulton. Monchester's controller, believes that before the management group procecds weth the discussion about atlocatine Foles and promotional dolsars to individual products, itmight be worthwhile to look at theie products on the bath of the octivities involved in their broduction. Fulton hat preoared the followino schedule to helo the manacement oroiso understand this conceot "Using this information," Fulton explained, "we can calculate an activity-based cost for each TV board and each PC board and 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 material. The cost drivers will replace the direct labor, machine time, and overhead costs in the old standard cost figures. 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 201. 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. 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. Horo Round your intermediate calculations to 2 decimal places
