Question

We expected informa Because of limited machine hour capacity, Eato Read the requirements. 18, which model will they produce? Carry each cost to the nearest cent. (tenore selling and administra Data Table - X Indirect Manufacturing Cost Per Unit Standard Deluxe ABC costs 328.00 $ 492.00 Single-rate costs 307.50 $ 512.50 Print Done

Answer 1

Requirement 1
Computation of gross profit using Activity based costing
Particulars	Standard	Deluxe
Selling price	800	1040	A
Direct material	31	47	B
Direct labor	45	54	C
Indirect manufacturing costs	328	492	D
Gross profit per unit	396	447	A-B-C-D
If eatons managers rely on activity based costing they will produce Deluxe model only
Requirement 2
Computation of gross profit using Single rate costs
Particulars	Standard	Deluxe
Selling price	800	1040	A
Direct material	31	47	B
Direct labor	45	54	C
Indirect manufacturing costs	307.5	512.5	D
Gross profit per unit	416.5	426.5	A-B-C-D
If eatons managers rely on single rate costing they will produce Deluxe model only
Requirement 3
Eatons managers will produce Deluxe model only as both the model of costing have given that this will give highest gross profit