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PT Falcon is a company that builds customize bicycles in Indonesia. Currently, the company just completed three bicycle projects ordered by three customers. The project
PT Falcon is a company that builds customize bicycles in Indonesia. Currently, the company just completed three bicycle projects ordered by three customers. The project manager asks you to prepare an analysis about the projects. Below is the relevant information: A. The job cost sheets of PT Falcon contained the following data: Job Number Direct Materials Direct Labor Total production Gross Margin per job (in unit) number A200 $30 per unit 300 30% of sales B150 $43 per unit $20 per hour $18 per hour $15 per hour 400 28% of sales C312 $58 per unit 250 25% of sales To produce a bicycle in job number A200, the company requires 2 direct labor hours. Meanwhile, a bicycle in job number B150 and C312 needs 4 and 8 direct labor hours respectively. B. The company is aware that direct labor or machine hours may not be the appropriate cost driver for overhead due to the complexities of the company's activities. Many companies use activity-based costing (ABC) which uses multiple cost drivers (items that consume resources) rather than just one cost driver to apply overhead to their activities. PT Falcon, thus, applies ABC as a method of costing because of variety activities involved in the company. Activity Cost Pools Cost Drivers Actual Overhead Design Cost per design $8,000 Grinding Machine hours $75,000 Installation Labor cost $40,000 Freight Number of $9,000 out delivery Actual Use of Cost Drivers per Activity A200 B150 C312 4 designs 4 designs 2 designs 250 hours 300 hours 150 hours $20,000 $10,000 $10,000 4 deliveries 6 deliveries 8 deliveries Instructions (Show your computation and rounded your answer to one decimal point) 1. Determine the overhead assigned to each job number 2. Determine the COGS of each job number 3. Determine the gross profit of each job number 4. Determine the operating profit for each job number based the information above. 5. What is the most profitable job order
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