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Kristopher Manufacturing_Activity costing




1. Kristopher Manufacturing produces two types of entry doors: Deluxe and Standard. The allocation basis for support costs has been direct labor dollars. For 2009, Kristopher compiled the following data for the two products;Deluxe;Standard;Sales in units;50,000;400,000;Sales price per unit;$650;$475;Direct material and labor costs per unit;$180;$130;Manufacturing overhead costs per unit;$80;$120;Last year, Kristopher purchased an expensive robotics system to allow for more decorative door products in the deluxe product line. The CFO suggested that an activity-based costing (ABC) analysis could be valuable to help evaluate a product mix and promotion strategy for the next sales campaign. She obtained the following ABC information for 2009;Activity;Cost;Cost Driver;Total;Deluxe;Standard;Setups;$500,000;# of setups;500;400;100;Machine-related;$44,000,000;# of machine hours;600,000;300,000;300,000;Packing;$5,000,000;# of shipments;250,000;50,000;200,000;Required (15 points);a. Using the current system, what is the estimated;1. total cost of manufacturing one unit for each type of door?;2. profit per unit for each type of door?;b. Using the activity-based costing data presented above;1. compute the cost-driver rate for each overhead activity.;2. compute the revised manufacturing overhead cost per unit for each type of entry door.;3. compute the revised total cost to manufacture one unit of each type of entry door.;4. compute the profit per unit for each type of door.;c. Is the deluxe door as profitable as the original data estimated? Why or why not?


Paper#27821 | Written in 18-Jul-2015

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