Question 1

Xander Company produces televisions. One of its plants produces two versions of televisions: a basic model and a premium model. At the beginning of the year, the following data were prepared for the plant:

	Basic Model	Premium Model
Expected Quantity	20,000	10,000
Selling Cost	$90	$200
Prime Costs	$40	$-80
Machine Hours	2,500	2,500
Number of requisitions	500	1,500
Maintenance hours	2,000	6,000
Number of setups	8	32

Additionally, the following overhead activity costs are reported:

Maintaining equipment	$220,000
Setting up equipment	$112,000
Purchasing materials	$87,000
Total	$419,000

Xander uses activity-based costing to calculate product cost.

Problem 7-3

Refer to Figure 7-6.

Required:

If required, round your answers to the nearest cent. When required, use rounded amounts in subsequent computations.

A. What is the plantwide overhead rate based on machine hours? $ per machine hour

B. Assuming a plantwide overhead rate, what is the unit cost of the basic model? $

C. Assuming a plantwide overhead rate, what is the unit cost of the premium model? $

Question 2

Stinler Corporation manufactures curtains for retail stores and for individual customers. The retail chain buys 70% of the curtains produced. The individual customers purchase curtains in approximately equal quantities, where the orders are about the same size. Data concerning Stinler's customer activity are as follows:

	Retail Stores		Individual Customers
Units sold	56,000		24,000
Orders placed	8		492
Number of sales calls	4		156
Manufacturing costs	8,000,000		3,500,000
Order filling costs allocated	375,000		225,000
Sales force costs allocated	265,000		135,000

Currently, customer-driven costs are assigned to customers based on units sold, a unit-level driver.

Required:

A. Assign costs to customers by using an ABC approach.

	Retail Stores	Individual Customers
Ordering	$	$
Sales calls	$	$
	$	$

B. Determine cost per unit sold for each type of customer. Round your answers to the nearest cent.

Retail stores	$
Individual customers	$