3. Using activity-based costing, calculate the total amount that each of the two product lines will contribute toward covering fixed costs and profit in 20x1.
(A) | (B) | (A)/(B) | |||||
Budgeted Cost | Cost Driver | Annual activity for cost driver | Cost drivers | ||||
Material Overhead | |||||||
Procurement | 840000 | Number of Parts | 5084100 | Parts | 0.17 | per part | |
Production scheduling | 460000 | Number of boards | 118650 | Boards | 3.88 | per board | |
Packing and Shipping | 920000 | Number of boards | 118650 | Boards | 7.75 | per board | |
Variable Overhead | |||||||
Machine setup | 908000 | Number of set-ups | 283500 | Set-ups | 3.20 | per board | |
Hazardous waste disposal | 104000 | Pounds of waste | 32067 | Pounds | 3.24 | per pound | |
Quality control | 1144000 | Number of Inspections | 283500 | Inspections | 4.04 | per inspection | |
General supplies | 144000 | Number of boards | 118650 | Boards | 1.21 | per board | |
Manufacturing | |||||||
Machine Inspection | 2600000 | Number of parts | 3681000 | Parts | 0.71 | per part | |
Manual Inspection | 8400000 | Number of parts | 1310000 | Parts | 6.41 | per part | |
Wave soldering | 284000 | Number of boards | 118650 | Boards | 2.39 | per board | |
Per unit cost | |||||||
TV Board | PC Board | ||||||
Requirement per unit | Cost driver | Per unit cost | Requirement per unit | Cost driver | Per unit cost | ||
Procurement | 63 | $ 0.17 | $ 10.41 | 30 | $ 0.17 | $ 4.96 | |
Machine Set-up | 3 | $ 3.20 | $ 9.61 | 2 | $ 3.20 | $ 6.41 | |
Hazardous waste disposal | 0.6 | $ 3.24 | $ 1.95 | 0.06 | $ 3.24 | $ 0.19 | |
Quality Control | 1 | $ 4.04 | $ 4.04 | 2 | $ 4.04 | $ 8.07 | |
Machine Inspection | 40 | $ 0.71 | $ 28.25 | 29 | $ 0.71 | $ 20.48 | |
Manual Inspection | 23 | $ 6.41 | $ 147.48 | 1 | $ 6.41 | $ 6.41 | |
Contribution Margin | |||||||
TV Board as per activity based costing | |||||||
Per unit | Total | ||||||
Sales Units | 69000 | ||||||
Sales revenue | $ 430.00 | $ 2,96,70,000.00 | |||||
Direct Material | $ 223.00 | $ 1,53,87,000.00 | |||||
Material Overhead | |||||||
Procurement | $ 10.41 | $ 7,18,215.61 | |||||
Production scheduling | $ 3.88 | $ 2,67,509.48 | |||||
Packing and Shipping | $ 7.75 | $ 5,35,018.96 | |||||
Variable Overhead | |||||||
Machine Set up | $ 9.61 | $ 6,62,984.13 | |||||
Hazardous waste disposal | $ 1.95 | $ 1,34,268.87 | |||||
Quality control | $ 4.04 | $ 2,78,433.86 | |||||
General supplies | $ 1.21 | $ 83,742.10 | |||||
Manufacturing | |||||||
Machine Inspection | $ 28.25 | $ 19,49,470.25 | |||||
Manual Inspection | $ 147.48 | $ 1,01,76,183.21 | |||||
Wave Soldering | $ 2.39 | $ 1,65,158.03 | |||||
Total cost | $ 439.97 | $ 3,03,57,984.51 | |||||
Contribution margin | $ -9.97 | $ -6,87,984.51 | |||||
Contribution Margin | |||||||
PC Board as per activity based costing | |||||||
Per unit | Total | ||||||
Sales Units | 44000 | ||||||
Sales revenue | $ 750.00 | $ 3,30,00,000.00 | |||||
Direct Material | $ 143.00 | $ 62,92,000.00 | |||||
Material Overhead | |||||||
Procurement | $ 4.96 | $ 2,18,091.70 | |||||
Production scheduling | $ 3.88 | $ 1,70,585.76 | |||||
Packing and Shipping | $ 7.75 | $ 3,41,171.51 | |||||
Variable Overhead | |||||||
Machine Set up | $ 6.41 | $ 2,81,848.32 | |||||
Hazardous waste disposal | $ 0.19 | $ 8,562.07 | |||||
Quality control | $ 8.07 | $ 3,55,104.06 | |||||
General supplies | $ 1.21 | $ 53,400.76 | |||||
Manufacturing | |||||||
Machine Inspection | $ 20.48 | $ 9,01,276.83 | |||||
Manual Inspection | $ 6.41 | $ 2,82,137.40 | |||||
Wave Soldering | $ 2.39 | $ 1,05,318.16 | |||||
Total cost | $ 204.76 | $ 90,09,496.57 | |||||
Contribution margin | $ 545.24 | $ 2,39,90,503.43 |
3. Using activity-based costing, calculate the total amount that each of the two product lines will contribute toward c...
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Manchester Technology, Inc. manufactures several different types of printed circuit boards; however, two of the boards account for the majority of the company's sales. The first of these boards, a television circuit board, has been a standard in the industry for several years. The market for this type of board is competitive and price-sensitive. Manchester plans to sell 69,000 of the TV boards in 20x1 at a price of $430 per unit. The second high-volume product, a personal computer circuit...
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