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Several years after reengineering its production process, Zippy Corporation hered a new controller Denise French She developed as ABC system very similar to the one
Several years after reengineering its production process, Zippy Corporation hered a new controller Denise French She developed as ABC system very similar to the one used by Zippy's chief val. Part of the reason French developed the ABC system was because Zippy's profits had been declining even though the company had shifted its product mix toward the product that had appeared most profitable under the old system. Before adopting the new ABC system. Zopy had used a plantwide overhead rate based on direct labor hours that was developed years ago mack the icon to view the overhead costs and budgeted at Read the requirements Requirement 1. Compute the gross profit per weet managers rely on the ABC unit cont dat. (En mounts to two decepcs) Begin by computing the total manufacturing cost per Wheel for each wheel model Zippy Corporation Total cost per unit using ABC data Standard Deluxe Total manufacturing cost Now compute the gross profit per wheel for each wheel model Zippy Corporation Gross profit per unit using ABC data Standard Deluxe Gross profit Requirement 2. Compute the gross profit per when if the managers rely on the plantwice allocation condita Begin by computing the total manufacturing costs. (Enter amounts to two decimal places) Zippy Corporation Total cost per unit using plantwide overhead rate Standard Deluxe Total manufacturing cost Now compute the gross prodit per wheel for each wheel model the manager rely on the plante location cost dotate anunt to decimal places Zippy Corporation Gross profit per unit using plantwide overhead rate Standard Deluwe Gross profil Requirement 3. Which product line is more profitable for the company? The standard modelis e del model Activity based conting data generally are cont data generated by a plantide overhead allocation rate. ABC systems have cont categories (activities, each with its cran alocation. Coniments represent the cost of resources consumed to manufacture and support products Requirement 4. Why might the controller have expected ABC to pas te cost-benefit test? Were there warning is that the company's old Gract labor-based allocation system was broken? The ABC system is likely to pass the cost benefit test because Zippy Corporation manufactures The old cost system appears broken because profits have been declining even though the company Data Table X Manufacturing Overhead Costs per Unit: Standard Deluxe ABC costs $ 253,00 $ 419.00 Plantwide overhead rate 273.00 $ 399.00 The following data are budgeted for the company's Standard and Deluxe models for next year. Standard Deluxe Sales price per wheel ....... $ 430.00 $ 610.00 Direct materials per wheel.... $ 31.50 $ 46.75 Direct labor per wheel $ 45.80 $ 51.50 Requirements 1. Compute the gross profit per wheel if managers rely on the ABC unit cost data. 2. Compute the gross profit per wheel if the managers rely on the plantwide allocation cost data 3. Which product line is more profitable for the company? 4. Why might the controller have expected ABC to pass the cost-benefit test? Were there any warning signs that the company's old direct-labor-based allocation system was broken? Requirement 3. Which product line is more profitable for the company? The standard model is the deluxe model. Activity-based costing data generally are cost data generated by a plantwide overhead allocation rate cost categories (activities), each with its own allocation base. ABC cost assignments represent the cost of ro just as profitable as cture and support) products, Requirement 4. Why less profitable than ted ABC to pass the cost-benefit test? Were there any warning signs that the company's old direct-labor-based allocation system wast moro profitablo than The ABC system is likely wowwww..wat because Zippy Corporation manufactures The old cost system appears "broken" because profits have been declining even though the company Requirement 3. Which product line is more profitable for the company? The standard model is the deluxe model. Activity-based costing data generally are overhead allocation rate. ABC systems have cost categories (activities), each with its own allo represent the cost of resources consumed to manufacture (and support) products. Requirement 4. Why might the controller have expected ABC to pass the cost-benefit test? Were there an allocation system was broken? The ABC system is likely to pass the cost-benefit test because Zippy Corporation manufactures The old cost system appears "broken" because profits have been declining even though the company cost data generated by a plantwide ments just as accurate as less accurate than pany's old direct-labor-based more accurate than Requirement 3. Which product line is more profitable for the company? The standard model is the deluxe model. Activity-based costing data generally are cost data generated by a plantwide overhead allocation rate ABC systems have cost categories (activities), each with its own allocation base. ABC cost assignments represent the cost of resources consumed to support) products, Requirement 4. Why might the controller hay less pass the cost-benefit test? Were there any warning signs that the company's old direct-labor-based allocation system was broken? more The ABC system is likely to pass the cost-ben the same ippy Corporation manufactures The old cost system appears "broken" because profits have been declining even though the company Choose from any list or enter any number in the input fields and then continue to the next question
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