Question

Wainut Systems produces two different products, Product A, which sols for $120 per unt, and Product B, which sals for $180 per unit, using throe difarent activitios: Design, which uses Enginearing Hours as an activty driver, Machining, which uses machine hours an an activity driver and Inspection, which uses number of batches as an activity driver The cost of each activity and usage of the acthvity drivers are as foillows Usage by Product A 200 1000 45 Usage by Product B 300 3.000 15 Design (Engineeing hours Mechining (Machine Hours) Inapection (Batches) $150.000 $500.000 $ 30,000 Wainut manufactures 10,000 units of Product A and 7,500 units of Product B per month. Each unit of Product A uses $50 of direct materials and $20 of direct isbor, while each unit of Product B uses S75 of direct materias and $35 of drect labor Required: a Calculate the Design acdivity proportions for Products A and B Design Activity Propertions Product A Product b. Calculate the Machining acivity proportions for Products A and B. Machining Activity Proportions Product A Product c. Calouiate the apecson acivity proportions for Products A andB Inspaction Acthvity Proportions Praduct A Product Bi

Answer 1

	Usage by product A	Usage by product B	Total
Design (Engineering hours)	200	300	500
Machining (Machine hours)	1000	3000	4000
Inspection (Batches)	45	15	60

a.
	Design activity proportions
Product A ( 200 / 500 )	40%
Product B ( 300 / 500 )	60%
b.
	Machining activity proportions
Product A ( 1000 / 4000 )	25%
Product B ( 3000 / 4000 )	75%
c.
	Inspection activity proportions
Product A ( 45 / 60 )	75%
Product B ( 15 / 60 )	25%
d.
	Product A
Design activity ( 150000 * 40% )	60000
Machining activity ( 500000 * 25% )	125000
Inspection activity ( 30000 * 75% )	22500
Indirect costs	207500
e.
	Product B
Design activity ( 150000 * 60% )	90000
Machining activity ( 500000 * 75% )	375000
Inspection activity ( 30000 * 25% )	7500
Indirect costs	472500
f.
	Product A
Direct materials	50	per unit
Direct labor	20	per unit
Indirect cost ( 207500 / 10000 )	20.75	per unit
Manufacturing cost	90.75	per unit
g.
	Product B
Direct materials	75	per unit
Direct labor	35	per unit
Indirect cost ( 472500 / 7500 )	63	per unit
Manufacturing cost	173	per unit
h.
	Product A
Selling price	120	per unit
(-) Manufacturing cost	90.75	per unit
Gross profit	29.25	per unit
i.
	Product B
Selling price	180	per unit
(-) Manufacturing cost	173	per unit
Gross profit	7	per unit