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Problem 4 - 2 0 ( 4 5 minutes ) 1 . a . The unit product cost under absorption costing is: Direct materials $
Problem minutes
a The unit product cost under absorption costing is:
Direct materials $
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
$: units
Absorption costing unit product cost $
b The absorption costing income statement is:
Sales units times $ per unit $
Cost of goods sold units times $ per unit
Gross margin
Selling and administrative expenses
$ units times $ per unit
Net operating income $
a The unit product cost under variable costing is:
Direct materials $
Direct labor
Variable manufacturing overhead
Variable costing unit product cost
b The variable costing income statement is:
Sales units times $ per unit $
Variable expenses:
Variable cost of goods sold
units times $ per unit $
Variable selling expenses
units times $ per unit
Contribution margin
Fixed expenses:
Fixed manufacturing overhead
Fixed selling and administrative expenses
Net operating income $
Problem continued
Exercise minutes
Firststage allocations of overhead costs to the activity cost pools:
Distribution of Resource Consumption
Across Activity Cost Pools
Supporting Direct Labor Order Processing Customer Support Other Totals
Wages and salaries
Other overhead costs
Direct Labor Support Order Processing Customer Support Other Totals
Wages and salaries $
$ $ $ $
Other overhead costs
Total cost $ $ $ $ $
Example: of $ is $
Computation of activity rates:
Activity Cost Pools a
Total Cost b
Total Activity a: b
Activity Rate
Supporting direct
labor
$
DLHs
$
per DLH
Order processing $ orders $ per order
Customer support $ customers $ per customer
Computation of the overhead costs for the Shenzhen Enterprises order:
Activity Cost Pool a
Activity Rate b
Activity atimes b
ABC Cost
Supporting direct labor
$
per DLH
DLHs $
Order processing $ per order order
Customer support $ per customer customer
Total $
DLHs per unit times units DLHs
The customer margin for Shenzhen Enterprises is computed as follows:
Customer MarginABC Analysis
Sales units times $ per unit $
Costs:
Direct materials $ per unit times units $
Direct labor $ per unit times units
Support direct labor overhead see part above
Order processing overhead see part above
Customer support overhead see part above
Customer margin $
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