Question

X New Tab Brightspace + →XCO Help Center ? Shine Company produces two types of control devices: Standard and Deluxe. The price for Standard and Deluxe is set based upon total manufacturing cost per unit. The following data pertains the two products: STANDARD DELUXE 60.000 40.000 Production and sales volume units Selling price Direct material Direct labor $17.00 $20.00 $2.50 $4.50 $6.20 $7.20 In addition to direct material and direct labor costs, each product is charged with a portion of company's total factory overhead costs. Currently. Shine is allocating factory overhead costs to product lines based upon direct labor hours. Tom the manager in charge of Deluxe operation has raised concerns about the credibility of the cost data. Specifically, Tom believes that actual manufacturing cost of Deluxe is less than what currently is reported. As a result, the price set for Deluxe is less competitive affecting sales volume. Furthermore, this issue has affected negatively the moral of the employees

a- compute Total manufacturing cost Per unit of Deluxe " under current plant-wide overhead allocation method "" based on Direct labor hours.
b- compute total manufacturing cost per unit of Deluxe using activity based costing for the allocation of factory overhead cost. Carry your overhead rate calculations up to THREE decimal point.              
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a- using activity based costing for the allocation of operating expenses of Alberto company, compute operating profit or loss made from customer Zillow company.
b- using activity based costing for the allocation of operating expenses of Alberto company, compute operating profit or loss made from customer Selma company.
Thanks

Answer 1

1-	Total manufacturing cost Per unit of Deluxe " under current plant-wide overhead allocation method "" based on Direct labor hours.
	Direct Material		6.2
	Direct labor		7.2
	factory Overhead per labor hour	(299200/44000)	6.8
	total Maufacturing cost per Unit		20.2
2-	Activity	Activity cost driver	Activity cost	total of units of activity cost drivers	supervision cost per unit of cost driver = per direct labor hour	supervision cost per unit of cost driver = per direct labor hour
	Supervision	Direct Labor hours	136400	44000	136400/44000	3.1
	Activity	Activity cost driver	Activity cost	total of units of activity cost drivers	supervision cost per unit of cost driver = per direct labor hour	supervision cost per unit of cost driver = per direct labor hour
	Inspection	no. of inspections	162800	81400	162800/81400	2
	total Direct Material		248000
	total Direct labor cost		288000
	Factory Overhead cost
	Supervision cost	3.1*20000	62000
	Inspection cost	2*31000	62000
	total manufacturin cost		660000
	no. of units produced		40000
	total Maufacturing cost per Unit	660000/40000	16.5