Question
The company uses absorbation cost when calculating manufacturing costs. Now studying a product named XY734. In the calculation, they distribute the manufacturing costs (TO) with
The company uses absorbation cost when calculating manufacturing costs. Now studying a product named XY734. In the calculation, they distribute the manufacturing costs (TO) with direct salary as the base of charges, while the material cost (MO) is distributed with direct material as a base of orders. Below is a summary of the financial outcome for the year 2020.
Outcome: Costs 2020: the factory (all amounts in 1000s of dollars) | |||||||
Manufacturing department | |||||||
Manufacturing | painting/ assembly | Purchases | Total | ||||
XY734 | Car | Kit | In common | In common | In common | ||
Material | 800 | 180 | 135 | 20 | 50 | 30 | 1 215 |
Monthly salary | 2 600 | 1 600 | 800 | 1 000 | 900 | 400 | 7 300 |
depreciation | 800 | 100 | 50 | 950 | |||
Rent | 500 | 70 | 50 | 620 | |||
Electricity | 200 | 40 | 23 | 263 | |||
Other costs | 100 | 357,5 | 171,75 | 957,5 | |||
Total | 3 400 | 1 780 | 935 | 2 620 | 1 517,5 | 725 | 11 305,50 |
Quantity according to budget (pce) | 20 000 | 5 000 | 10 000 | 35 000 | |||
Quantity according to result (st) | 20 000 | 4 500 | 9 000 | 33 500 |
a) Calculate Allocated Manufacturing Overhead cost of the product XY734 during the year 2020,
b)What would manufacturing cost of the XY734 amount to if the company instead used a marginal product?
c)Which of the calculation models in data a ( Allocated Manufacturing Overhead cost) and b (marginal product) would you recommend Polaris AB to use? Motivate your answer.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started