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Simpson Clock Corporation produces electronic and mechanical clocks in four plants in and around Springfield. Its direct variable costs (material and labor) per unit are
Simpson Clock Corporation produces electronic and mechanical clocks in four plants in and around Springfield. Its direct variable costs (material and labor) per unit are the same in each plant; manufacturing overhead in each plant, all fixed, is S18,000,000 Material cost per unit Labor cost per uni Electronic Mechanical S30 S20 $8 $24 Machine time per unit 12 minutes 12 minutes Per unit costs and machine time inputs Springfield 750,000 Shelbvville 0 500,000 Output quantities Salem 300,000 300,000 Burlingtorn 375,000 250,000 Electronic Mechanical a. Find the unit manufacturing cost (UMC) for the two types of clocks made in the Springfield and Shelbyville plants, respectively b. Find the UMC for electronic and mechanical clocks made in the plants in Salem and Burlington, assuming that manufacturing overhead is allocated on the basis of machine time. Which plant has the lower costs per unit? Why? c. Find the UMC for electronic and mechanical clocks made in the plants in Salem and Burlington, assuming that manufacturing overhead is allocated on the basis of labor costs incurred. Which plant has the lower costs per unit? Why? d. Assume that the Shelbyville plant planned to and did produce 600,000 mechanical clocks, but only sold 500,000 of them. What happens to the UMC of mechanical clocks at the Shelbyville plant? Will Simpson's income change? By how much
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