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# (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)