Requirement 1.Emery\'s managers rely on the ABC unit cost data computed in 2018,

Question

Requirement 1.Emery's managers rely on the ABC unit cost data computed in 2018, which model will they produce? Carry each cost to the neanest cent ignore selling and administrative expenses for this calculation.) Use the ABC unit cost data to oompute the gross proft per unit for each model ABC Data Gross Saies prce Direct materials ndirect manufacturing costs Gross proft per unit Emery's managers will produce 2000 units of the Requirement 2. I the managers rely on the single plantwide overhead allocation rate cost data, which model will they produce? Use the single plantwide alocation rate cost data to compute the gross proft per unit for each model, (Round amounts to the nearest cent SX.Xx) 7 model t Single-Allocation-Base Data Gross Profits Standard Deluxe Sales price Direct labor Indirect manufacturing costs Gross proft per unit they rely on the single plantwide allocation rate cost data, Emery's managers will produce the Requirement 3. Which course of action will yield more income for Emery? Emery will eam more income by producing the model It will appear to maxime income. model data ane generally mone accurate tan Indirect Manufacturing Cost Per Unit Standard Deluxe ABC costs $462.00 $ 539.00 Single-rate costs 400.40 $600.60 Standard Deluxe Sales price Direct materials Direct labor $920.00 $ 1,020.00 50.00 52.00 34.00 48.00

Explanation / Answer

Requirement 1. Using ABC unit cost data

Looking at the above table it can be concluded that Emery's manager will produce 2000 units of the Deluxe model in order to maximize income.

Requirement 2. Using single rate cost data

Looking at the above table it can be concluded that Emery's manager will produce the Standard model in order to maximize income.

Requirement 3. Emery will earn more income by producing standard model and using single plantwide allocation rate cost.

Generally ABC unit cost data are more accurate than the single plantwide allocation rate cost data.

Particulars Standard (in $) Deluxe (in$) Sale Price per unit 920 1020 Less: Direct Material Cost 34 50 Less: Direct Labor Cost 48 52 Less: Indirect manufacturing cost 462 539 Gross Profit per unit 376 379

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