Problem 4-3A Meanwhile, its custom-made furniture is in high demand and customer
ID: 2423716 • Letter: P
Question
Problem 4-3A
Meanwhile, its custom-made furniture is in high demand and customers have commented on its favorable (lower) prices compared to its competitors. Management is considering dropping its line of retail products and devoting all of its resources to custom-made furniture. Required What reasons could explain why competitors are forcing the company to lower prices on its high- volume retail products? Why do you believe the company charges less for custom-order products than its competitors? Does a company's costing method have any effect on its pricing decisions? Explain. Aside from the differences in volume of output, what production differences do you believe exist between making custom-order furniture and mass-market furnishings? What information might the company obtain from using ABC that it might not obtain using volume- based costing methods? Craft Pro Machining produces machine tools for the construction industry. The following details about F overhead costs were taken from its company records.Explanation / Answer
1)Grinding - Unit level
2)Polishing - unit level
3)Product modification - product level
4)Providing power - Facility level
5)System calibration - Batch level
2)Activity overhead rated
3) Cost assigned to jobs
4)Overhead rate per unit
Product 3175
74,650/200
= $373.25
Product 4286
383,425/2,500
=$153.37 per unit
5)
Plantwide overhead rate = total overhead/ total direct labor hours
= $1,810,000/4875
= $371.28
Overhead cost Job 3175 = $371.28 *500/200
= $928.20
Overhead cost job 4286 = $371.28 * 4375/2500
= $649.74
6)ABC method
1)Grinding - Unit level
2)Polishing - unit level
3)Product modification - product level
4)Providing power - Facility level
5)System calibration - Batch level
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.