1. Customer Profitability Analysis
Gonalong, Inc. has 10 customers that account for all of its $4,520,000 of net income. Its activity-based costing system is able to assign all costs, except for $650,000 of general administrative costs, to key activities incurred in connection with serving its customers. A customer profitability analysis based on activity costing produced the following customer profits and losses:
| Customer |
#1 |
$336,000 |
| |
#2 |
634,000 |
| |
#3 |
(277,000) |
| |
#4 |
979,000 |
| |
#5 |
1,060,000 |
| |
#6 |
902,000 |
| |
#7 |
628,000 |
| |
#8 |
292,000 |
| |
#9 |
(95,000) |
| |
#10 |
711,000 |
| Total |
|
$5,170,000
|
a. Calculate the total profits for the 8 most profitable customers
2. Activity-Based Costing and Conventional Costs Compared
Chef Grill Company manufactures two types of cooking grills: the Gas Cooker and the Charcoal Smoker. The Cooker is a premium product sold in upscale outdoor shops; the Smoker is sold in major discount stores. Following is information pertaining to the manufacturing costs for the current month.
| Units |
1,000 |
4,000 |
| Number of batches |
60 |
10 |
| Number of batch moves |
80 |
20 |
| Direct materials |
$20,000 |
$100,000 |
| Direct labor |
$20,000 |
$27,000 |
Manufacturing overhead follows:
| Materials acquisition and inspection |
$288,000 |
Amount of direct materials cost |
| Materials movement |
16,900 |
Number of batch moves |
| Scheduling |
42,000 |
Number of batches |
| |
$346,900 |
|
Rounding instructions: Do not round until your final answers. Round total cost answers to the nearest dollar and per unit answers to the nearest cent.
(a) Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming all manufacturing overhead is assigned on the basis of direct labor dollars.
HINT: Use 7.3809 for overhead rate calculations.
| Total cost |
$Answer
|
|
| Gas Cooker |
$Answer
|
per unit |
| Charcoal Smoker |
$Answer
|
per unit |
(b) Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming manufacturing overhead is assigned using activity-based costing.
| Total cost |
$Answer
|
|
| Gas Cooker |
$Answer
|
per unit |
| Charcoal Smoker |
$Answer
|
per unit
|
Activity-Based Costing and Conventional Costs Compared
Chef Grill Company manufactures two types of cooking grills: the Gas Cooker and the Charcoal Smoker. The Cooker is a premium product sold in upscale outdoor shops; the Smoker is sold in major discount stores. Following is information pertaining to the manufacturing costs for the current month.
| Units |
1,000 |
4,000 |
| Number of batches |
60 |
10 |
| Number of batch moves |
80 |
20 |
| Direct materials |
$20,000 |
$100,000 |
| Direct labor |
$20,000 |
$27,000 |
Manufacturing overhead follows:
| Materials acquisition and inspection |
$288,000 |
Amount of direct materials cost |
| Materials movement |
16,900 |
Number of batch moves |
| Scheduling |
42,000 |
Number of batches |
| |
$346,900 |
|
Rounding instructions: Do not round until your final answers. Round total cost answers to the nearest dollar and per unit answers to the nearest cent.
(a) Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming all manufacturing overhead is assigned on the basis of direct labor dollars.
HINT: Use 7.3809 for overhead rate calculations.
| Total cost |
$Answer
|
|
| Gas Cooker |
$Answer
|
per unit |
| Charcoal Smoker |
$Answer
|
per unit |
(b) Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming manufacturing overhead is assigned using activity-based costing.
| Total cost |
$Answer
|
|
| Gas Cooker |
$Answer
|
per unit |
| Charcoal Smoker |
$Answer
|
per unit
|
Activity-Based Costing and Conventional Costs Compared
Chef Grill Company manufactures two types of cooking grills: the Gas Cooker and the Charcoal Smoker. The Cooker is a premium product sold in upscale outdoor shops; the Smoker is sold in major discount stores. Following is information pertaining to the manufacturing costs for the current month.
| Units |
1,000 |
4,000 |
| Number of batches |
60 |
10 |
| Number of batch moves |
80 |
20 |
| Direct materials |
$20,000 |
$100,000 |
| Direct labor |
$20,000 |
$27,000 |
Manufacturing overhead follows:
| Materials acquisition and inspection |
$288,000 |
Amount of direct materials cost |
| Materials movement |
16,900 |
Number of batch moves |
| Scheduling |
42,000 |
Number of batches |
| |
$346,900 |
|
Rounding instructions: Do not round until your final answers. Round total cost answers to the nearest dollar and per unit answers to the nearest cent.
(a) Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming all manufacturing overhead is assigned on the basis of direct labor dollars.
HINT: Use 7.3809 for overhead rate calculations.
| Total cost |
$Answer
|
|
| Gas Cooker |
$Answer
|
per unit |
| Charcoal Smoker |
$Answer
|
per unit |
(b) Determine the total and per-unit costs of manufacturing the Gas Cooker and Charcoal Smoker for the month, assuming manufacturing overhead is assigned using activity-based costing.
| Total cost |
$Answer
|
|
| Gas Cooker |
$Answer
|
per unit |
| Charcoal Smoker |
$Answer
|
per unit
|
Activity-Based Costing and Conventional Costs Compared
Chef Grill Company manufactures two types of cooking grills: the Gas Cooker and the Charcoal Smoker. The Cooker is a premium product sold in upscale outdoor shops; the Smoker is sold in major discount stores. Following is information pertaining to the manufacturing costs for the current month.
| Units |
1,000 |
4,000 |
| Number of batches |
60 |
10 |
| Number of batch moves |
80 |
20 |
| Direct materials |
$20,000 |
$100,000 |
| Direct labor |
$20,000 |
$27,000 |
Manufacturing overhead follows:
| Materials acquisition and inspection |
$288,000 |
Amount of direct materials cost |
| Materials movement |
16,900 |
Number of batch moves |
| Scheduling |
42,000 |
Number of batches |
| |
$346,900 |
|
Rounding instructions: Do not round until your final answers. Round total cost answers to the nearest dollar and per unit answers to the nearest cent.
Activity-Based Costing and Conventional Costs Compared
Chef Grill Company manufactures two types of cooking grills: the Gas Cooker and the Charcoal Smoker. The Cooker is a premium product sold in upscale outdoor shops; the Smoker is sold in major discount stores. Following is information pertaining to the manufacturing costs for the current month.
| Units |
1,000 |
4,000 |
| Number of batches |
60 |
10 |
| Number of batch moves |
80 |
20 |
| Direct materials |
$20,000 |
$100,000 |
| Direct labor |
$20,000 |
$27,000 |
Manufacturing overhead follows:
| Materials acquisition and inspection |
$288,000 |
Amount of direct materials cost |
| Materials movement |
16,900 |
Number of batch moves |
| Scheduling |
42,000 |
Number of batches |
| |
$346,900 |
|
Rounding instructions: Do not round until your final answers. Round total cost answers to the nearest dollar and per unit answers to the nearest cent.
Activity-Based Costing and Conventional Costs Compared
Chef Grill Company manufactures two types of cooking grills: the Gas Cooker and the Charcoal Smoker. The Cooker is a premium product sold in upscale outdoor shops; the Smoker is sold in major discount stores. Following is information pertaining to the manufacturing costs for the current month.
| Units |
1,000 |
4,000 |
| Number of batches |
60 |
10 |
| Number of batch moves |
80 |
20 |
| Direct materials |
$20,000 |
$100,000 |
| Direct labor |
$20,000 |
$27,000 |
Manufacturing overhead follows:
| Materials acquisition and inspection |
$288,000 |
Amount of direct materials cost |
| Materials movement |
16,900 |
Number of batch moves |
| Scheduling |
42,000 |
Number of batches |
| |
$346,900 |
|
Rounding instructions: Do not round until your final answers. Round total cost answers to the nearest dollar and per unit answers to the nearest cent.