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show all work and I prefer typed answer and not handwritten. thanks Sylar Company manufactures a product that is available in both a Deluxe model
show all work and I prefer typed answer and not handwritten. thanks
Sylar Company manufactures a product that is available in both a Deluxe model and a Regular model. The company has manufactured the Regular model for years. The Deluxe model was introduced several years ago to tap a new segment of the market. Since introduction of the Deluxe model, the company's profits have steadily declined and management has become increasingly concerned about the accuracy of its product costing system. Sales of the Deluxe model have been increasing rapidly. Manufacturing overhead is allocated to products on the basis of direct labor hours. For the upcoming year, the company has estimated that it will incur $900,000 in manufacturing overhead cost and produce 5,000 units of the Deluxe model and 40,000 units of the Regular model. The Deluxe model requires two hours of direct labor time per unit, and the Regular requires one hour. Material and labor costs per unit are as follows: MODEL Deluxe Regular Direct Materials $40 $25 Direct Labor $14 $7 Required: 1. Management is considering using activity-based costing to allocate manufacturing overhead costs to products. After interviews with company employees, it was determined that the activity-based costing system would have the following four activity cost pools: Estimated Activity Cost Pool Activity Measure Overhead Cost Purchasing Purchase orders issued $204,000 Processing Machine-hours 182,000 Scrap Scrap orders issued 379.000 Shipping Number of shipments 135,000 $900,000 Expected Activity Next Year Activity Measure Deluxe Regular Total Purchase orders issued 200 400 600 Machine-hours 20.000 15,000 35,000 Scrap issues ordered 1,000 1,000 2,000 Number of shipments 250 650 900 Using activity-based costing, determine the cost per unit for cach model and the total gross margin for each product for the upcoming year. Inited States) Step by Step Solution
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