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MTI makes three types of lawn tractors: M3100, M4100, and M6100. In the past, it allocated overhead to products using machine-hour Last year, the company
MTI makes three types of lawn tractors: M3100, M4100, and M6100. In the past, it allocated overhead to products using machine-hour Last year, the company produced 10,000 units of M3100, 16,500 units of M4100, and 8,000 units of M6100 and had the following revenues and costs: MTI Income Statement M31ee M4100 $9, 200,000 $15,600,eee M61ee $14,200,000 Total $39, eee, eee 3,000,000 580,000 4,100,eee 870, eee 3,400,000 1,770, eee 10,500,000 3,220, eee Sales revenue Direct costs Direct materials Direct labor Variable overhead Setting up machines Processing sales orders Warehousing Operating machines Shipping Contribution margin Plant administration Gross profit 2,205,000 1,650,000 2,646,000 1,210,000 759,000 $16,810,000 5,700,000 $11, 110,000 ITI's controller has heard about activity-based costing and puts together an employee team to recommend cost allocation bases mployee team recommends the following. Activity Setting up machines Processing sales orders Warehousing Operating machines Shipping Cost Driver Production runs Sales orders received Units held in inventory Machine-hours Units shipped M3100 M4100 M6100 1921 170 380 200 110 210 100 6,400 9,100 8,700 8,000 16,500 10,000 Herences Income Statement M3100 M4100 9,200,000 $ 15,600,000 T $ M6100 14,200,000 otal 39,000,000 $ $ 3,000,000 580,000 4,100,000 870,000 3.400.000 1.770.000 Sales revenue Direct costs: Direct material Direct labor Variable overhead Contribution margin Plant administration Gross profit 10,500,000 3.220.000 8,470,000 16,810,000 5,700,000 11,110,000 $ 5,620,000 $ 10,630,000 $ 9,030,000 $ S
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