Question
Question 2: (40 marks) Sanyo Company produces programmable and non-programmable calculators and operates at capacity. The following data are presented for your use: Programmable Non-programmable
Question 2: (40 marks)
Sanyo Company produces programmable and non-programmable calculators and operates at capacity. The following data are presented for your use:
Programmable Non-programmable
Annual production in units | 50,000 | 100,000 |
Direct materials costs | $ 150,000 | $ 300,000 |
Direct manufacturing labor costs | $ 50,000 | $100,000 |
Direct manufacturing labor hours | 2500 | 5000 |
Machine-hours | 25,000 | 50,000 |
Number of production runs-set-ups | 50 | 50 |
Inspection hours | 1000 | 500 |
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Manufacturing overheads are as follows:
Overhead cost pool Total for both products
Machining costs | $ 375,000 |
Setup costs | 120,000 |
Inspection costs | 105,000 |
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Required
1-Choose a cost driver for each overhead cost pool and calculate the manufacturing overhead cost per unit for each product. (20 marks)
2-Compute the manufacturing cost per unit for each product. (15 marks)
3-How does the activity based costing system help Sanyos managers to better manage their business. (5 marks)
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