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Check my work mode : This shows whet is correct or incorrect for the work you have completed so far. It does not indicate completion. Return to question 3 Kitchen Kings toledo plant mamutacturethree Procct nsel mot-tu product models are the Regufar (REG), the Advanced AD), and the Gourmet (GMT). Until recently, the plant used a ob-order product-costing system. with manufacturing overhead all mult-butnec cerarnc cookto plant's three applied on the basis of ditional costing system was based. Planned annual production Volume in units Production runs 2e cuns of 5e units runs of 125 units 2 points Direct material 9 setup) (not including per product unit by product line in a year Machine houns (H) Total machine hours consumed 48,0ae 7 MH 1, 000) is $12 per The annual budgeted overnead is s1224000, and the company's predetertmaned overhead rate is s2 per reported under the plants traditional costing system borhour The procust costs for the thtee product models as r are shown ini the following table Direct moterial Direct labor (not including set-up Kitchen King's pncing policy is to set a target price for each product equal to 130 percent of the full product cost Due to price competition from other appliance manufachirers REG uhits were selling at $525. and ADV units were selling for $628. These prices were somewhat below the firm's target prices. However these results were partially offset by greater-than-expected profits on the GMT product ine. Mänagement had raised the price on the GMT model to $800, which was higher than the original target price. Even at this pice, Kitchen King's customers did not seem to hesitate to place orders Moreover the company's competitors did not mount a challenge in the market fon the GMT product line Nevertheless. concern contihued to mount in Toledo about the difficulty in the REG a markets Ater al, these were the plamts preed and-butter products, with projected annual sales of 5,000 REG units nd ADV and 4.000 ADV of 7lNext O Type here to search

Answer 1

3					REG	ADV	GMT
	Direct material				129	151	203
	Direct labor				171	209	247
	Total direct cost per unit				300	360	450
	Manufacturing overhead:			(Note:1)
	Machine-related				27	32.4	45.9
	Material handling				4.2	5.25	10
	Purchasing				5	6	26
	Setup				6.8	8.5	17
	Inspection				2	2.5	7.5
	Shipping				6	6	12
	Engineering				2.5	2.5	10
	Facility				50	60	85
	Total ABC overhead cost per unit				103.5	123.15	213.4
	Total product cost per unit				403.5	483.15	663.4
	Note:1 computation of manufacturing overhead
	Activity		Activity cost pool	Cost driver		Cost driver quantity	Pool rate	Product line	Cost driver quantity for product line	Activity cost for product line	Product line production volume	Activity cost per unit of product
			a			b	c=a/b		d	e=c*d
	Machine related		310500	Machine hours		115000	2.7	REG	50000	135000	5000	27
								ADV	48000	129600	4000	32.4
								GMT	17000	45900	1000	45.9
								Total	115000	310500
	Material handling		52500	Production runs		100	525	REG	40	21000	5000	4.2
								ADV	40	21000	4000	5.25
								GMT	20	10500	1000	10.5
								Total	100	52500
	Purchasing		75000	Purchase orders		300	250	REG	100	25000	5000	5
								ADV	96	24000	4000	6
								GMT	104	26000	1000	26
								Total	300	75000
	Setup		85000	Production runs		100	850	REG	40	34000	5000	6.8
								ADV	40	34000	4000	8.5
								GMT	20	17000	1000	17
								Total	100	85000
	Inspection		27500	Inspection hours		1100	25	REG	400	10000	5000	2
								ADV	400	10000	4000	2.5
								GMT	300	7500	1000	7.5
								Total	1100	27500
	Shipping		66000	Shipments		1100	60	REG	500	30000	5000	6
								ADV	400	24000	4000	6
								GMT	200	12000	1000	12
								Total	1100	66000
	Engineering		32500	Engineering hours		650	50	REG	250	12500	5000	2.5
								ADV	200	10000	4000	2.5
								GMT	200	10000	1000	10
								Total	650	32500
	Facility		575000	Machine hours		115000	5	REG	50000	250000	5000	50
								ADV	48000	240000	4000	60
								GMT	17000	85000	1000	85
								Total	115000	575000
								Grand total		1224000