60.1K

Verified Solution

Link Copied!

Cary Company manufactures two models of industrial componentsa Standard model and an Advanced Model. It has provided the following information with respect to these two products:

	Standard			Advanced
Number of units produced and sold		20,000			10,000
Selling price per unit	$	150		$	200
Direct materials per unit	$	40		$	60
Direct labor cost per unit	$	30		$	30
Direct labor-hours per unit		1.50			1.50

The company considers all of its manufacturing overhead costs ($1,346,250) to be fixed and it uses plantwide manufacturing overhead cost allocation based on direct labor hours

Within the tab titled Activity Based Approach, go to the section called Product Margin Analysis. Create formulas (within cells B16 through C19) that calculate the amounts of overhead cost that should be allocated from each activity cost pool to each product. Also, create all of the formulas that are needed to compute the product margins for each product and the company as a whole (cells B21 through D21). a. What formulas correctly calculate the cost assignments from the Order Processing and Setups activities to the Advanced model? b. How much overhead cost is assigned from each of the four activities to the Standard and Advanced models? c. What is the product margin for the Standard model? The Advanced model?

Answer & Explanation Solved by verified expert

See Answer