orp. manufactures computer desks in its Austin?, Texas?, plant. The company uses
ID: 2394611 • Letter: O
Question
orp. manufactures computer desks in its Austin?, Texas?, plant. The company uses? activity-based costing to allocate all manufacturing conversion costs? (direct labor and manufacturing? overhead). Its activities and related data follow. LOADING...?(Click the icon to view the activity areas and related? data.) Requirements 1. Compute the? per-unit manufacturing product cost of Standard desks and Unpainted desks. 2. Premanufacturing? activities, such as product? design, were assigned to the Standard desks at $ 7 each and to the Unpainted desks at $ 5 each. Similar analyses were conducted of? post-manufacturing activities, such as? distribution, marketing, and customer service. The? post-manufacturing costs were $ 22 per Standard and $ 21 per Unpainted desk. Compute the full product costs per desk. 3. Which product costs are reported in the external financial? statements? Which costs are used for management decision? making? Explain the difference. 4. What price should McKnight's managers set for Standard desks to earn a $ 40 profit per? desk
Requirement 1. Compute the? per-unit manufacturing product cost of Standard desks and Unpainted desks. ?(Complete all input boxes. Enter a? "0" for any zero amounts. Round your answers to the nearest whole? dollar.)
Activity of Activity Allocation Base Allocation Rate Materials handling. . $310,000 Number of parts $0.60 Assembling. . . . . . . $2,200,000 Direct labor hours $13.00 Painting. . . . . . . . . . . . . $150,000 Number of painted desks $4.90Explanation / Answer
Answer: Requirement 1 The per unit manufacturing cost of standard desk and unpainted desk is as follows: Standard Desk Unpainted Desk Direct material 139900 28700 Add: Material handling 72900 (0.6*121500) 18900 (0.6*31500) Add: Assembling 81900 ($13*6300) 10400 ($13*800) Add: Painting 34300 ($4.90*7000) Total manufacturing cost 329000 58000 Number of units 7000 2000 Manufacturing cost per unit 47 (329000/7000) 29 (58000/2000) Requirement 2 The full product cost per desk is as follows: Standard Desk Unpainted Desk Manufacturing cost per unit 47 29 Add: Product design cost 7 5 Add: Post-manufacturing cost 22 21 Full product cost per unit 76 55 Requirement 3 Manufacturing product costs are reported in external financial statement. Full product cost are used for management decision making. Full product cost include cost of premanufacturing and post manufacturing activities that are expenses when incurred for external financial reporting. Requirement 4 The price McKnight's manager set for standard desk to earn a profit of $40. Standard Desk Full cost per desk 76 Add: Profit per desk 40 Sales price per desk 116
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