Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello

تمرين 28

Costume Kings has two product lines: machine-made costumes and hand-made costumes. The com­pany assigns $80,000 in manufacturing overhead costs to two cost pools: power costs and inspection costs. Of this amount, the power cost pool has been assigned $32,000 and the inspection cost pool has been assigned $48,000. Additional information about each product line is shown below.
a. Allocate the manufacturing overhead from the activity cost pools to each product line. Use what you believe are the most significant cost drivers from the information provided.
b. Compute the cost per unit of machine-made costumes and hand-made costumes.
c. On a per-unit basis, which product line appears to be the most profitable? Explain.