Cost Accounting (14th Edition)

438 CHAPTER 12 PRICING DECISIONS AND COST MANAGEMENT
Exhibit 12-1
Manufacturing Costs of Provalue for 2011 Using Activity-Based Costing
A
B
C
1
2
Total Manufacturing
Costs for Manufacturing
3
150,000 Units Cost per Unit
4
(1) (2) = (1) ÷ 150,000
5
6
7
Direct manufacturing costs
Direct material costs
(150,000 kits × $460 per kit) $ 69,000,000 $ 460
8
9
Direct manufacturing labor costs
(480,000 DML-hours × $20 per hour) 9,600,000 64
10
11
Direct machining costs
(300,000 machine-hours × $38 per machine-hour) 11,400,000 76
12 Direct manufacturing costs 90,000,000 600
13
14 Manufacturing overhead costs
15
16
Ordering and receiving costs
(22,500 orders × $80 per order) 1,800,000 12
17
18
Testing and inspection costs
(4,500,000 testing-hours × $2 per hour) 9,000,000 60
19
20
Rework costs
(30,000 rework-hours × $40 per hour) 1,200,000 8
21 Manufacturing overhead cost 12,000,000 80
22 Total manufacturing costs $ 102,000,000 $ 680
Exhibit 12-2
Product Profitability of Provalue for 2011 Using Value-Chain
Activity-Based Costing
A
B
C
1
2
Total Amounts
for 150,000 Units Per Unit
3
(1) (2) = (1) ÷ 150,000
4 Revenues
$150,000,000 $ 1,000
5 Costs of goods sold a (from Exhibit 12-1) 102,000,000 680
6
7
Operating costs b
R&D costs
5,400,000 36
8 Design cost of product and process 6,000,000 40
9 Marketing costs
15,000,000 100
10 Distribution costs 3,600,000 24
11 Customer-service
costs
3,000,000 20
12 Operating costs 33,000,000 220
13 Full cost of the product 135,000,000 900
14 Operating
income
$ 15,000,000 $ 100
15
16
Cost of goods sold = Total manufacturing costs because there is no beginning or ending inventory
17 of Provalue in 2011
18
Numbers for operating cost line-items are assumed without supporting calculations