80.2K

Verified Solution

Link Copied!

Ice Cool produces two different models of air conditioners. The activities, costs, and cost drivers associated with the production processes follow.

$\backslash$table$[[,$Activity,udgeted Cost,Activity Cost Driver,$\backslash$table$[[$Budgeted$],[$Activity$]]],[$Assembly$,$Machining,$$311,000,$Machine hours $($MH$),7,800],[$Setups$,26,000,$Setups,$60],[,$$$337,000,,],[$Finishing$,$Inspecting,$$226,000,$Inspections,$780],[$Support$,$Purchasing,$$132,000,$Purchase orders,$480]]$

Additional production information concerning its two models follows.

$\backslash$table$[[,$Model X$,$Model Z$,],[$Units and Activities,$1,800,3,600,],[$Units produced,$2,200,5,600,],[$Machine hours,$20,40,],[$Setups$,500,280,],[$Inspections$,320,160,],[$Purchase orders,,,$],[$Per Unit,Model X$,$Model Z$,],[$Selling price per unit,$$415,$$$395,],[$Direct materials cost per unit,$145,120,],[$Direct labor cost per unit,$150,155,]]$

For each model, compute the gross profit per unit $($selling price per unit minus product cost per unit$).($Round "Product cost per unit" and "Gross Profit" to $2$ decimal places and other intermediate calculations to the nearest whole dollar amount. Negative amounts should be indicated with a minus sign.$)$

$\backslash$table$[[$Per Unit,Selling Price,Product cost per unit,Gross Profit$],[$Model X$,,,],[$Model Z$,,,]]$

Compute the activity rate for each activity using activity$-$based costing. $($Round "Activity rate" to $2$ decimal places.$)$

$\backslash$table$[[$Activity$,$Budgeted Cost,Budgeted Activity Usage,Activity Rate$],[$Machining$,,,,,],[$Setups$,,,,,],[$Inspecting$,,,,,],[$Purchasing$,,,,,]]$

Compute the total product cost per unit for each model. $($Round "Activity Rate" to $2$ decimal places and other intermediate calculations to the nearest whole dollar amount. Round your final answers to $2$ decimal places.$)$

$\backslash$table$[[$Per Unit,Direct Materials,Direct Labor,Overhead,Product Cost per Unit$],[$Model X$,,,,],[$Model Z$,,,,]]$

Using activity$-$based costing, compute the overhead cost per unit for each model. $($Round "Activity Rate" to $2$ decimal places and other answers to the nearest whole dollar amount.$)$

$\backslash$table$[[$Overhead cost per unit$-$Model X$],[$Activity$,$Activity Usage,Activity Rate,Allocated Cost$],[$Machining$],[$Setups$],[$Inspection$],[$Purchasing$],[$Total allocated cost$],[$Units produced$],[$Overhead cost per unit$],[$Overhead cost per unit$-$Model Z$],[$Activity$,$Activity Usage,Activity Rate,Allocated Cost$],[$Machining$],[$Setups$],[$Inspection$],[$Purchasing$],[$Total allocated cost$],[$Units produced$],[$Overhead cost per unit,,,$]]$

Answer & Explanation Solved by verified expert

See Answer