Question
X Sports produces two product line: football and basketball currently, you use a costing system that allocates overhead in a non-scientific manner as a function
X Sports produces two product line: football and basketball
currently, you use a costing system that allocates overhead in a non-scientific manner as a function of how much profitability each product line can generate. He has prepared the following product unit profitability report for its review by the management committee.
Production and Sales volume- Football:80000units Basketballs 60000 units
Selling price- $16 and $29
Direct materials- 2 and 5
Direct Labor 4.5 and 7.2
MOH 2.1 and 3.1
Gross Profit: 7.4 and 13.7
SGA 4 and 7
Operating profit 3.4 and 6.7
They decide use ABC costing by the product development department
Activities/ Activity cost/ Activity cost driver/ Football and Basketball
Supervision/ $125800/ DL hours/ 0.65DLH per unit and 1.6DLH per unit
Inspection/ $231000/ # of inspections/ 120000 and 45000
Question:
The total supervision cost allocated to Basketball under the ABC system
The total overhead cost allocated to Football under the ABC system
The operating profit per unit of Footballs under the ABC system
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