(WIP) ACC 350 Exam 1 Study Material
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. Determine the gross margin (per unit) of the regular and deluxe models using the current costing<br />
system.<br />
Regular:<br />
DM = $8<br />
DL = $20/DLH * ¼ DLH = $5<br />
MOH = $17.80 * ¼ DLH = $4.45<br />
Total Product Cost = $17.45<br />
Selling Price = $25<br />
Gross Margin = $25 – $17.45 = $7.55 per unit<br />
Deluxe:<br />
DM = $10<br />
DL = $20/DLH * 1 DLH = $20<br />
MOH = $17.80 * 1 DLH = $17.80<br />
Total Product Cost = $47.80<br />
Selling Price = $60<br />
Gross Margin = $60 – $47.80 = $12.20 per unit<br />
c. For each activity, calculate activity rates<br />
Activity Annual Cost Activity Driver Total Activity Rate<br />
Purchase Orders $246,000 # of POs 400 $615.00<br />
Inspections $600,000 # of Inspections 750 $800.00<br />
Production Set-ups $710,000 Setup Hours 500 $1,420.00<br />
Machine Maintenance $450,000 MH 290,000 $1.55<br />
Facility Costs $575,000 Per unit 520,000 $1.11
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