Sheffield, Inc. manufactures specialty toys. Trendy uses a traditional product costing system to assign overhead costs uniformly to all products. To meet industry safety standards and to assure its customers of safe and durable toys, Trendy assigns its quality control overhead costs to all products at a rate of 20% of direct labor costs. Its direct labor cost for the month of August for its toddler line of toys is $345,000. In response to repeated requests from its financial vice president, Trendy's management agrees to adopt activity-based costing. Data relating to the toddler line of toys for the month of August are as follows: Number of Cost Overhead Drivers Used Activity Cost Pools Cost Drivers Rate per Activity Materials Inspection pounds Number of pounds $0.60 per pound 45,000 Assembly Line Inspection Number of finished toys $0.16 per toy 203,000 toys National Toy Association Certification Retail orders $2.00 per order 800 orders Compute the quality control overhead cost to be assigned to the toddler toy line for the month of August (1) using the traditional product costing system (direct labor is the cost driver), and (2) using activity-based costing. Quality-Control Overhead Cost Traditional costing $ Activity-based costing avotes Bar folder. Or import from another browser. Import favorites Sheffield Inc had a bad year in 2019. For the first time in its history. It operated at a loss. The company's income statement showed the following results from selling 79,000 units of product: net sales $1,580,000; total costs and expenses $1.963,040, and net loss $383,040. Costs and expenses consisted of the following Cost of goods sold Selling expenses Administrative expenses Total Variable Fixed $1,305,800 $803,000 $502,800 510.240 90.000 420.240 147,000 55.000 92.000 $1,963,040 $948,000 $1,015,040 Management is considering the following independent alternatives for 2020. 1 Increase unit selling price 25% with no change in costs and expenses. 2. Change the compensation of salespersons from fixed annual salaries totaling $205,000 to total salaries of $36.015 plus a 5% commission on net sales 3. Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 50:50. (a) Compute the break-even point n dollars for 2019. (Round contribution margin ratio to 4 decimal places eg. 02512 and final answer to O decimal places, 29 2510) Break-even point $ 1.691.733.33 (b) Compute the break-even point in dollars under each of the alternative courses of action for 2020. (Round contribution margin ratio to 3 decimal places e30251 and final answers to decimal places, eg 2510.) Break-even point 1. Increase selling price $ 2. Change compensation $ 3. Purchase machinery $
