| Variable manufacturing overhead is applied on the basis of direct-labor hours. For 20x4, variable overhead is budgeted at $27,588,750, and direct-labor hours are estimated at 290,850. The hourly rates for machine time and direct labor are $30 and $38, respectively. The company applies a material-handling charge at 10 percent of material cost. This material-handling charge is not included in variable manufacturing overhead. Total 20x4 expenditures for direct material are budgeted at $26,275,000. | | Andrew Fulton, Ultratechs controller, believes that before the management group proceeds with the discussion about allocating sales and promotional dollars to individual products, it might be worthwhile to look at these products on the basis of the activities involved in their production. Fulton has prepared the following schedule to help the management group understand this concept. | | Using this information, Fulton explained, we can calculate an activity-based cost for each TV board and each PC board and then compare it to the standard cost we have been using. The only cost that remains the same for both cost methods is the cost of direct material. The cost drivers will replace the direct labor, machine time, and overhead costs in the old standard cost figures | Budgeted Cost | | Cost Driver | Budgeted Annual Activity for Cost Driver | | Procurement | $ | 960,000 | | Number of parts | | 8,687,700 parts | | Production scheduling | | 520,000 | | Number of boards | | 143,850 boards | | Packaging and shipping | | 1,040,000 | | Number of boards | | 143,850 boards | | | | | | | | | | Total | $ | 2,520,000 | | | | | | | | | | | | | | Machine setup | $ | 956,000 | | Number of setups | | 346,500 setups | | Hazardous waste disposal | | 128,000 | | Pounds of waste | | 36,204 pounds | | Quality control | | 1,216,000 | | Number of inspections | | 346,500 inspections | | General supplies | | 180,000 | | Number of boards | | 143,850 boards | | | | | | | | | | Total | $ | 2,480,000 | | | | | | | | | | | | | | Machine insertion | $ | 3,200,000 | | Number of parts | | 6,100,000 parts | | Manual insertion | | 9,600,000 | | Number of parts | | 2,474,000 parts | | Wave-soldering | | 344,000 | | Number of boards | | 143,850 boards | | | | | | | | | | Total | $ | 13,144,000 | | | | | | | | | | | | | | Required per unit | PC Board | TV Board | | Parts: | | 87 | | | 42 | | | Machine insertions | | 52 | | | 41 | | | Manual insertions | | 35 | | | 1 | | | Machine setups | | 3 | | | 2 | | | Hazardous waste disposal | | .50 | lb. | | .08 | lb. | | Inspections | | 3 | | | 2 | | | (PLEASE ASSIST WITH ANSWERING THE QUESTION BELOW) | On the basis of Ultratechs unit cost data given in the problem, calculate the total amount that each of the two product lines will contribute toward covering fixed costs and profit in 20x4. (Round your intermediate calculations to 2 decimal places.) | | | | | | PC Board | TV Board | | Total contribution margin | $0 | $0 | | | | Using activity-based costing, calculate the total amount that each of the two product lines will contribute toward covering fixed costs and profit in 20x4. (Round your intermediate calculations to 2 decimal places.) | | | | | | PC Board | TV Board | | Total contribution margin | $0 | $0 | | | | | | | |
