Home Insert Dra Page Layout Formulas Data Revie TOTAL A 3,000 MACHINE HOURS 10,0

Question

Home Insert Dra Page Layout Formulas Data Revie TOTAL A 3,000 MACHINE HOURS 10,000 # OF ORDERS 2,000 INSPECTION HOURS ACTIVITY COST POOL ASSEMBLY TOTAL COST 400,000 ORDDER PROCESSING 250,000 INSPECTION 100,000 ADDITIONAL DATA: 3000 UNITS MADE IN 2016 60000 MACHINE HOURS USED 800 ORDERS 80 INSPECTION HOURS IN ADDITON 100LBS OF MATERIAL USED AT AVERAGE OF $8 PER LB AND 200 DIRECT LABOR HOURS WERE CHARGED TO THE PRODUCT AT AN AVERAGE LABOR COST OF $20 PER HOUR. THE PRODUCT SELLS FOR $12 PER UNIT. WHAT IS THE ACTIVITY RATE FOR ASSEMBLY? WHAT IS THE ACTIVITY RATE FOR ORDER PROCESSING? WHAT IS THE ACTIVITY RATE FOR INSPECTION? HOW PROFITABLE WAS PRODUCT THIS YEAR? IF ASSEMBLY AND INSPECTION COST ARE PRODUCT COSTS AND ORDER PROCESSING IS PERIOD COST, WHAT WOULD BE GROSS MARGIN OF PERIOD AS A PERCENTAGE OF SALES UNDER GAAP?

Explanation / Answer

What is the activity rate for assembly

= Total cost / Activity base = 400,000 / 3000 machine hours = 133.33 per hour

What is the activity rate for Order processing

= 250000 / 10000 = 25 per order

What is the activity rate for the inspection

= 100,000 / 2000 Inspections = 50 per inspection

Based on additional information given in the comments..............last two questions are solved as under

Values in per unit column are obtained by dividing the cost column with 3000 units produced.

Gross margin ratio = ( 14 - 10.68) / 14 * 100 = 3.32/14 * 100 = 23.71%

Total Per unit Material   100 lbs * 8 per lb 800 0.27 Labor cost          200 hours * 20 4000 1.33 Assembly cost     60,000 * 133.33 7235 2.41 Order processing 20000 6.67 Inspection 4000 1.33 Total 36035 12.01 Sale value ( 3000 Units * 14) 42000 14 Product profitability ( Sales - TC) 5965 2

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.