An alternate method of assigning costs is activity-based costing. The major acti
ID: 2561490 • Letter: A
Question
An alternate method of assigning costs is activity-based costing. The major activity for the production of both Processor01 and Android01 is component assembly. There will be a total of 125,000 assemblies per year for the production of 500 units of Processor01 and 300 units of Android01 at a total cost of $25 million. Each unit of Android01 will require 180 assemblies. The remaining cost for the production of Android01 is for components, at $25,000 per unit.
Question 2: What would be the cost per unit of producing Android01 using activity-based costing? .
Next, suppose IPS uses markup pricing for Android01. Fixed costs are $4.5 million, and for a level of production of 300 units, the variable cost per unit is $48,000. Question 3: What is the price of the Android01 at 30 percent markup over full cost?
Explanation / Answer
Costs in compound assembly = 25,000,000
Total assemblies per year = 125,000
No of units of Processr01 = 500
No of unit of Android01 = 300
Each unit Android01 requires 180 assemblies
No of assemblies for Android01 = 180 assemblies * 300 units = 54,000
No of assemblies for Processor01 = 125,000 - 54,000 = 71,000
Costs for Android01 = 25,000,000*54,000/125,000 = 10,800,000
Costs for Processor01 = 25,000,000*71,000/125,000 = 14,200,000
2. Cost per unit of producing Android01
Variable cost per unit = 48,000
Fixed costs = 4,500,000
No of units = 300
Fixed cost per unit = 4,500,000/300 = 15,000
Manufacturing overhead per unit = 10,800,000 / 300 = 36,000
Cost per unit = Variable cost per unit + fixed cost per unit + manufacturing overhead cost per unit
= 48,000 + 15,000 + 36,000 = 99,000
3. Selling price at 30% markup over full cost = 99,000+(99,000*30%) = 99,000+29,700 = 128,700.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.