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11 months ago

(WIP) ACC 350 Exam 1 Study Material

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. Determine the gross

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

d. Determine the gross margin (per unit) of the regular and deluxe models using the ABC information. NOTE: Your answers may differ slightly based on your rounding. Activity Regular Deluxe Purchase Orders $123,000 $123,000 Inspections $400,000 $200,000 Production Set-ups $355,000 $355,000 Machine Maintenance $387,931 $62,069 Facility Costs $552,885 $22,115 $1,818,816 762,184 # of Units 500,000 20,000 $3.64 38.11 DM 8.00 10.00 DL (from part 2) 5.00 20.00 Total Product Cost 16.64 68.11 Selling Price $25.00 $60.00 Gross Margin $8.36 ($8.11)