TDABC in a manufacturing organization

Sigma Company produces three versions of a brass desk lamp: basic, custom, and deluxe.

The planned production information for the upcoming month follows:

Resources Cost per month Fringe Benefits Total Hours Per Month

Direct labor $$4,270$ $$800$ $$5,070130$

Indirect labor $$4,210$ $$600$ $$4,810130$

Machinery $$50,000$ $$50,000250$

Basic Custom Deluxe

PER UNIT

Selling price $$170$ $$190$ $$230$

Direct materials cost $$40$ $$50$ $$55$

PRODUCTION

Production and sales volume $($units$)4,5003,2001,200$

Direct labor hours per unit $2\mathrm{.}002\mathrm{.}503\mathrm{.}00$

Total direct labor hours $9,000\mathrm{.}008,000\mathrm{.}003,600\mathrm{.}00$

Machine hour per unit $0\mathrm{.}050\mathrm{.}080\mathrm{.}09$

Total machine run time $($hours$)225\mathrm{.}00256\mathrm{.}00108\mathrm{.}00$

Number of production turns $12108$

Setup time per production run $2\mathrm{.}001\mathrm{.}002\mathrm{.}50$

Total setup time $($machine hours$)24\mathrm{.}0010\mathrm{.}0020\mathrm{.}00$

Total machine hours $249\mathrm{.}00266\mathrm{.}00128\mathrm{.}00$

INDIRECT LABOR DATA

Setup time per run $($hours$)3\mathrm{.}004\mathrm{.}006\mathrm{.}00$

Number of employees per setup $444$

Indirect labor hours per setup $12\mathrm{.}0016\mathrm{.}0024\mathrm{.}00$

In order to meet anticipated demand for the upcoming month, Sigma Company plans to rent $3$

machines, each costing $$50,000$ per month, and hire $4$ indirect workers, each costing $$4,810$

per month. The total cost of the $3$ machines and $4$ indirect workers comprises the total

overhead cost at Sigma Company.

Round intermediate calculations to two decimals.

a$)$ Given the production plan, what is the deluxe product's total contribution margin?

Round answer to nearest dollar.

$

Answer $1$

b$)$ If Sigma Company computes a plantwide rate to allocate total overhead cost to the three

products by dividing the sum of indirect labor cost and machine cost by planned total direct

labor hours, what is the total overhead cost that will be allocated to the deluxe product, and

what will be its resulting gross margin? Round answer to nearest dollar.

Total overhead cost? $

Answer $2$

Resulting gross margin? $

Answer $3$

c$)$ If Sigma Company uses TDABC to allocate the indirect labor cost and the machine cost

to the three products, what will be the total overhead cost allocated to the deluxe product,

and what will be its resulting gross margin? Round answer to nearest dollar.

Total overhead cost? $

Answer $4$

Resulting gross margin?