Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question: If the company adds the molded door line, should ABC be considered? Why? Fully discuss all pertinent points and show calculations needed to support

Question: If the company adds the molded door line, should ABC be considered? Why? Fully discuss all pertinent points and show calculations needed to support your answers.

Related Information; Play and Stay Manufacturing(P&S) has a factory that produces cabinetry for the RV and marine market. The company has other product lines. Materials and labor for the cabinets are determined by each job. To simplify the assignment, we will assume the following average costs The following information highlights P&S Manufacturing's cost structure for 2020.

The materials include $2,800 for the wood and other materials on a per job basis.

It requires 24 hours of labor on average for the cabinetry. The hourly rate is $11.

The sales price will be set at a markup of 80%.

The company estimates that it will have 43,200 direct labor hours in total for the cabinets.

It assumes 1800 units are sold on average per year. A breakdown of estimated yearly costs related to the cabinetry follows: Salaries- office & administrative $ 500,000

Salaries for factory personal $ 350,000

Office Rent $ 150,000

Factory Rent $ 30,000

Office utilities and Misc office expenses(based on units sold) $ 15,000

Sales travel(based on units sold) $ 24,000 I

nsurance - office $ 12,000

Depreciation - office equipment $ 40,000

Depreciation for factory equipment $ 70,000

Advertising $ 20,000

Sales commissions(based on units sold) $ 50,000

Factory Property taxes $ 25,000

Maintenance for factory equipment $ 80,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Understanding And Auditing IT Systems Volume 2

Authors: Young-Woon Min

2nd Edition

1257758837, 978-1257758838

More Books

Students also viewed these Accounting questions

Question

Why We Listen?

Answered: 1 week ago