Perdon Corporation manufactures safes-large mobile safes, and large walk-in stat

Question

Perdon Corporation manufactures safes-large mobile safes, and large walk-in stationary bank safes. As part of its annual budgeting process, Perdon is analyzing the profitability of its two products. Part of this analysis involves estimating the amount of overhead to be allocated to each product line. The information shown below relates to overhead. Mobile Safes Walk-in Safes 190 300 440 790 54 Units planned for production Material moves per product line Purchase orders per product line Direct labor hours per product line 340 1,690 The total estimated manufacturing overhead was $ 272,000. Under traditional costing (which assigns overhead on the basis of direct labor hours), what amount of manufacturing overhead costs are assigned to: (Round answers to 2 decimal places, eg. 12.25) (1)One mobile safe per unit (2) per unit One walk-in safe

Explanation / Answer

a) traditional costing 272,000/(790+1690) 109.6774 one mobile safe (109.6774*790)/190 456.03 per unit one walk in safe (109.6774*1690)/54 3432.50 per unit one mobile safe 456.03 one walk in safe 3432.50 b) Activity based Materials handling (173000)/(300+200) 346 one mobile safe (346*300)/190 546.32 per unit one walk in safe (346*200)/54 1281.48 per unit one mobile safe 546.32 one walk in safe 1281.48 b-2) Activity based purchasing activity (99000)/(440+340) 126.9231 one mobile safe (126.9231*440)/190 293.93 per unit one walk in safe (126.9231*340)/54 799.15 per unit one mobile safe 293.93 one walk in safe 799.15 c) Tradition ABC one mobile safe 456.03 840.24 one walk in safe 3432.50 2080.63

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