MCM Revisit manufactures mid-century modern inspired bookcases that are offered in a variety of wood and finishes. Trina, one of their accountants, is looking over the various key processes used for conversion work. All units require most of the processes while units will require either staining or painting, but not both. Since the units have varying process needs to arrive at completion, MCM has chosen an operation costing approach. Trina has compiled the following information about their budgeted costs and production volume for this year:
MCM has collected the following cost information to accompany the budgeted numbers for the year:
Trina has also put together a breakdown of what each type of bookcase needs in order to be completed:
Following list represents the prices of each type of bookcase set by MCM:
Use the above information to answer the following questions.
a. What is the budgeted cost per unit for each of the key processes?
b. What is the total unit cost assigned to each type of bookcase?
c. What is the gross margin percentage for each type of bookcase? Which bookcase is the strongest performer for MCM and which is the weakest? What can be recommended to the management of the company?
d. Could MCM have used a purely Process Costing system instead of operation costing to track the costs of producing each type of bookcase?

Question

MCM Revisit manufactures mid-century modern inspired bookcases that are offered in a variety of wood and finishes. Trina, one of their accountants, is looking over the various key processes used for conversion work. All units require most of the processes while units will require either staining or painting, but not both. Since the units have varying process needs to arrive at completion, MCM has chosen an operation costing approach. Trina has compiled the following information about their budgeted costs and production volume for this year:
  MCM has collected the following cost information to accompany the budgeted numbers for the year:
  Trina has also put together a breakdown of what each type of bookcase needs in order to be completed:
  Following list represents the prices of each type of bookcase set by MCM:
  Use the above information to answer the following questions.
a. What is the budgeted cost per unit for each of the key processes?
b. What is the total unit cost assigned to each type of bookcase?
c. What is the gross margin percentage for each type of bookcase? Which bookcase is the strongest performer for MCM and which is the weakest? What can be recommended to the management of the company?
d. Could MCM have used a purely Process Costing system instead of operation costing to track the costs of producing each type of bookcase?

Quizplus · Accepted Answer

The Answer of MCM Revisit manufactures mid-century modern inspired bookcases that are offered in a variety of wood and finishes. Trina, one of their accountants, is looking over the various key processes used for conversion work. All units require most of the processes while units will require either staining or painting, but not both. Since the units have varying process needs to arrive at completion, MCM has chosen an operation costing approach. Trina has compiled the following information about their budgeted costs and production volume for this year:
  MCM has collected the following cost information to accompany the budgeted numbers for the year:
  Trina has also put together a breakdown of what each type of bookcase needs in order to be completed:
  Following list represents the prices of each type of bookcase set by MCM:
  Use the above information to answer the following questions.
a. What is the budgeted cost per unit for each of the key processes?
b. What is the total unit cost assigned to each type of bookcase?
c. What is the gross margin percentage for each type of bookcase? Which bookcase is the strongest performer for MCM and which is the weakest? What can be recommended to the management of the company?
d. Could MCM have used a purely Process Costing system instead of operation costing to track the costs of producing each type of bookcase?

MCM Revisit Manufactures Mid-Century Modern Inspired Bookcases That Are Offered