Problem 1:
Mathias Company manufactures a number of specialized machine parts. Part Bunkka-22 uses $35 of direct materials and $15 of direct labor per unit.
Mathias estimates manufacturing overhead is as follows:
|
Materials handling |
$100,000 |
|
Machining |
200,000 |
|
Factory supervision |
150,000 |
|
Total |
$450,000 |
Overhead is applied based on direct labor costs, which were estimated at $200,000.
Mathias is considering adopting activity-based costing. The cost drivers are estimated at:
|
Activity |
Cost Driver |
Expected Use |
|
Materials Handling |
Weight of materials |
50,000 pounds |
|
Machining |
Machine hours |
20,000 hours |
|
Factory supervision |
Direct labor hours |
12,000 hours |
- Compute the cost of 1,000 units of Bunkka-22 using the current traditional costing system.
- Compute the cost of 1,000 units of Bunkka-22 using the proposed activity-based costing system. Assume the 1,000 units use 2,500 pounds of materials, 500 machine hours, and 1,000 direct labor hours.
Problem 2:
In the month of March, New Day Spa services 570 clients at an average price of $120. During the month, fixed costs were $21,000 and variable costs were 65% of sales.
- Determine the contribution margin in dollars, per unit, and as a ratio.
- Using the contribution margin technique, compute the break-even point in dollars and in units.
Attachments:
5_assign.xlsx