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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Costume Kings has two product lines; Machine made costumes and hand made costumes. The company assigns $80,000 in manufacturing overhead costs to two cost pools; Power cost and Inspection cost. Of this amount, the power cost pool has been assigned $32,000 and the inspection cost pool has been assigned $48,000. Additional information about each product line is shown below:
| Â |
Machine Made |
Hand Made |
|
Sales Revenue |
$240,000 |
$160,000 |
|
Direct labor and material cost |
$120,000 |
$96,000 |
|
Units produced and sold |
48,000 |
16,000 |
|
Machine hours |
96,000 |
4,000 |
|
Quality control inspection hours |
1,200 |
800 |
Required:-
Allocate manufacturing overhead from the activity cost pools to each product line. Use what you believe is the most significant cost drivers from information provided.
Compute the cost per unit of Machine made costumes and hand made costumes.
On a per-unit basis, which product line appears to be the most profitable? Explain.
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