Labor related
Activity Rate = Overheads/Labor dollars
= 8000/40,000
= $0.2 per dollar
A = 0.2*8000 = $1,600
B = 0.2*32,000 = $6,400
Sales related
Rate = 7200/600 = $12 per unit
A = 200*12 = 2,400
B = 400*12 = 4,800
Production Set up
Rate = 16,000/(200/10 + 400/5)
= $160 per batch
A = 20*160 = $3,200
B = 80*160 =$12,800
Profit Margin for A = 16,000-3,200-8,000-1600-2400-3200 = -$2,400
B = 80,000-16,000-32,000-6,400-4,800-12,800 = $8,000
Question 1 faliacating costs using ABC, product profit margin) Generic Motors Corporation has two product lines,...
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Question 1 (allocating costs using ABC, product profit margin) My NC Generic Motors Corporation has two product lines, A and B. Its revenue and costs for last year is as follows Product A Product B Total sales volume units) 100 200 300 Ravenue 510,000 350,000 560.000 Costs direct materials $2.000 $10,000 $12.000 direct labor 55.000 520,000 $25,000 OH costs $19.500 Profit $3.500 Generic Motors uses ABC to allocate the overhead costs. It examined the main activities in the firm, and...
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