Landon Company makes two models of children\'s playhouses. the Castle and the Ma
ID: 2351604 • Letter: L
Question
Landon Company makes two models of children's playhouses. the Castle and the Mansion Basic production information follows: Landon has monthly overhead of 181. 685. which is divided into me following cost pools: The company has also compiled me following information about me chosen cost drivers: Select me appropriate cost driver for each cost pool and calculate me activity rates it Landon wanted to implement an ABC system (Round your answers to 2 decimal places. Omit the " " sign in your response. ) Assuming an ABC system, assign overhead costs to each product based on activity demands (Omit the " " sign in your response. ) Calculate the production cost per unit for each of Landon's products in an ABC system (Round your intermediate calculations and final answers to 2 decimal places. Omit the "$" sign in your response. ) Calculate Landon's gross margin per unit for each product under an ABC system (Round your intermediate calculations and final answers to 2 decimal places. Omit the "$" sign in your response. )Explanation / Answer
Requirement 1: Select the appropriate cost driver for each cost pool and calculate the activity rates if Landon wanted to implement an ABC system. (Round your answers to 2 decimal places. Omit the "$" sign in your response.) setup costs cost drive is number of setups $84,000/105 = $800 per setup quality control cost driver is inspections $59,985/645 inspections = $93 per inspection maintance cost driver is machine hours $37,700/2900 machine hours = $13 per MH Setup Costs $800 per setup Quality Control $93 per inspection Maintenance $13 per MH Requirement 2: Assuming an ABC system, assign overhead costs to each product based on activity demands . (Omit the "$" sign in your response.) Overhead Overhead Assigned Assigned To Castle To Mansion Setup Cost $33,600 $50,400 Quality Control $32,550 $27,435 Maintenance $18,200 $19,500 Total Overhead Cost $84,350 $97,335 (figures: 42*800 = 33600 63*800 = 50400 350*93 = 32550 295*93 = 27435 1400*13 = 18200 1500*13 = 19500) Requirement 3: Calculate the production cost per unit for each of Landon's products in an ABC system. (Round your intermediate calculations and final answers to 2 decimal places. Omit the "$" sign in your response.) castle: 36 + 20 + 84,350/680 = $180.04 mansion: 71 + 31 + 97,335/340 = $388.28 Castle Mansion Unit cost $ 180.04 $ 388.28 Requirement 4: Calculate Landon's gross margin per unit for each product under an ABC system. (Round your intermediate calculations and final answers to 2 decimal places. Omit the "$" sign in your response.) castle: 365 - 180.04 = 184.96 mansion: 583 - 388.28 = 194.72 Castle Mansion Gross margin $ 184.96 $ 194.72
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