70.2K

Verified Solution

Link Copied!

According to the pictures/tables below,

1. Explain the key differences in product costs between the two alternative costing systems. 2. Explain the key differences in net profit margins between the two alternative costing systems. 3. How does the margins have shifted and the costs have shifted.

Table 1-DSD quarter 1 income statement by product group Metal safes Plastic safes Total 296900 Sales revenues Direct materials Process and support costs Total costs Net income Profit margin 246800 543700 20680 42180 231770 170280 402050 444230 99470 18.3% 253270 190960 43630 55840 Metal Plastic Totl Cost driver Insulation process hours Assembly process hours Number of inspections Number of requisitions Number of sales orders Total Estimated costs Activity rateMetal 180700 69600 80080 97300 48720 22880 14340 9300 192540 Insulation process 83400 00013000 1200 y process 2800 quality cont Materials management Selling and administration 57200 33460 14570 209510 100 1000 23870 402050 30 Traditional method Metal safes Plastic safes Total 296,900.00 246,800.00 $543,700.00 Sales revenues Direct materials Process and support costs Total costs Net income Profit margin 21,500.00 S231,770.00 20,680.00 $170,280.00 42,180.00 402,050.00 253,270.00 43,630.00 14.70% $190,960.00 $55,840.00 22.63% 444,230.00 $99,470.00 18.30% Activity-based costing method (revised) Metal safes Plastic safes Total S296,900.00 246,800.00 543,700.00 Sales revenues Direct materials Process and support costs Total costs Net income Profit margin $21,500.00 $192,540.00 $20,680.00 209,510.00 42,180.00 402,050.00 214,040.00 $82,860.00 27.91% 230,190.00 $16,610.00 6.73% 444,230.00 $99,470.00 18.30%

Answer & Explanation Solved by verified expert

See Answer