Shady Fabrication Group (SFG) manufactures components for manufacturing equipment at several facilities. The company produces two, related, parts at its Park River Plant, the models SF-08 and SF-48. The differences in the models are the quality of the materials and the precision to which they are produced. The SF-48 model is used in applications where the precision is critical and thus requires
greater oversight in the production process.
Although sales remain reasonably strong, managers at SFG have noticed that the company is meeting more resistance to the pricing for SF-08, although there seems to be little need for negotiation on the price of the SF-48 model. As a result, the marketing manager at SFG has asked the financial staff to review the costs of the two products to understand better what might be happening in the
market.
Manufacturing overhead is currently assigned to products based on their direct labor costs. For the most recent month manufacturing overhead was $185,400. During that time, the company produced 8,240 units of Model SF-08 and 2,060 units of Model SF-48. The direct costs of production were as follows:
Direct materials
Direct labor
SF-08
$ 164,800
123,600
SF-48
92,700
82, 400
Total
$257,500
206,000
Management determined that overhead costs are caused by three cost drivers. These drivers and their costs for last month were as
follows:
Cost Driver
Direct material costs
Number of production runs
Number of inspections
Total overhead
Overhead Costs
51,500
55, 620
78,280
$ 185,400
Activity Level
SF-08
SF-48
164,800
92,700
20
40
11
Total
257,500
60
19
Shady Fabrication Group (SFG) manufactures components for manufacturing equipment of soveral faclities. The company produces two, related, parts at as Park River Plant, the models SF-08 and SF 48 . The differences in the models are the qualty of the materials and the prectsion to which they are procluced, The SF. 48 model is used in applcations whiere the precision is cilical and thus requires greater oversight in the production process. Although sales remain reasonably strong, managers at SFG have noticed that the company is meeting more resistance to the pricing for SF 08 , athough there seems to be little need for negotiation on the price of the SF. 48 model. As a result, the marketing manager at SFG has asked the financkl staff to review the costs of the two products to understand better what might be happening th the market Manufocturing overhead is currently assigned to products based on their direct labor costs. Foc the most recent month manufacturing overhead was $185.400. During that time, the company produced 8.240 units of Model SF-08 and 2.060 units of Mockel SF 48 . The direct costs of production were as follows: Managemient chetermined thot overhead costs are chused by three cost drivers. These drivers and their costs for last month were as followes Required: Manapenent deterenined that ovethead costs are caused ty three cost divers. Theye drivers and their costs for last monith were as follows: Reevired: a. How much overhead wil be assigned to eich product if these three cost detwers are used to allocate overhead? What is the total cost per unit produced for each product? b. How much of the overhead wir be assigned to each product if direct labor cost is used to allocate overhead? What is the total cost. per unit produced for evach product? Camplete this question by entering your answers in the tabs below. How much orerhead was he assigned to each product if these three cost divers are used to allocote overhead? What is the totat cost per unit produced for exch product? Noter Roiand "Total unt cost" to 2 decimal places. Required: o. How much overhead will be assigned to each product if these three cost drivers are used to allocate overhead? What is the fotal cost per unit produced for each product? b. How much of the overhead will be assigned to each product if direct labor cost is used to allocate overhead? What is the total cos per unit prodisced for each product? Complete this question by entering your answers in the tabs below. How mach overhead will be assigned to each product if these three cost drivers are used to allocate overhead? What is the total cost per ynit produced for each product? Note. Round "Total unit coct" to 2 docimal places. o. How much ovethead will be assigned to evach product if these theee cost drivers are used to allocate overhead? What is the total cost per unit produced for each product? b. How much of the overhead will be ossigned to eoch product if direct labor cost is used to allocate ovethead? What is the total cost per unit produced for each produci? Complete this question by entering your answers in the tabs below. Htow much of the overhead will be assigned to each product if diroct labor cost is used to allocate overheadh What is the total cost por unis prodoced for each prodict? Noter Raund "Total unit cost" to 2 decimal places
