Question

Hone Corp. manufactures computer desks in its Phoenix, Arizona, plant. The company uses activity-based costing to allocate all manufacturing conversion costs (direct labor and manufacturing overhead). Its activities and related data follow.

Hone Corp. manufactures computer desks in its Pheonix, Arizona, plant. The company uses activity-based costing to allocate all manufacturing conversion costs (direct labor and manufacturing overhead). Its activities and related data follow. (Click the icon to view the activity areas and related data.) Requirements 1. Compute the per-unit manufacturing product cost of Standard desks and Unpainted desks. 2. Premanufacturing activities, such as product design, were assigned to the Standard desks at $6 each and to the Unpainted desks at $3 each. Similar analyses were conducted of post-manufacturing activities, such as distribution, marketing, and customer service. The post-manufacturing costs were $25 per Standard and $23 per Unpainted desk. Compute the full product costs per desk. 3. Which product costs are reported in the external financial statements? Which costs are used for management decision making? Explain the difference. 4. What price should Hone's managers set for Standard desks to earn a $42 profit per desk? Requirement 1. Compute the per-unit manufacturing product cost of Standard desks and Unpainted desks. (Complete all input boxes. Enter a "O" for any zero amounts. Round your answers to the nearest whole dollar.) Standard Desk Unpainted Desk Direct materials Materials handling Assembling Painting Total manufacturing cost Number of units Manufacturing cost per unit Choose from any list or enter any number in the input fields and then continue to the next question.

Answer 1

1		Standard Desk	Unpainted Desk
	Direct materials	$36,550	$81,000
	Materials Handling	$108,000	$27,000
	Assembling	$87,000	$15,000
	Painting	$26,950	$14,700
	Total manufacturing cost (a)	$258,500	$137,700
	No. of units (b)	5,500	3,000
	Manufacturing cost per unit (a/b)	$47.00	$45.90
	Working
	Materials Handling	(120,000*$0.9)	(30,000*%0.9)
	Assembling	(5,800*$15)	(1,000*$15)
	Painting	(5,500*$4.9)	(3,000*$4.9)
2		Standard Desk	Unpainted Desk
	Manufacturing cost per unit	$47.00	$45.90
	Pre-Manufacturing Cost	$6.00	$3.00
	Post-Manufacturing Cost	$25.00	$23.00
	Full Product Cost per unit	$78.00	$71.90
3	Price for Standard Desk = Full product cost+Desired Profit for Std Desk
	Price for Standard Desk = $78 + $42 = $120 per desk