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Question - Come-On-In Manufacturing produces two types of entry doors: Standard and Deluxe. The assignment basis for manufacturing overheads has been direct labour hours. For 2019, Come-On-In compiled the following data for the two products:
Standard
Deluxe
Sales units
400,000 Doors
50,000 Doors
Sales price per unit
$475.00
$710.00
Direct material and labour costs per unit
$130.00
$180.00
Manufacturing overhead costs per unit
$120.00
$80.00
Direct labour hours
40,000 hours
10,000 hours
Last year, Come-On-In Manufacturing purchased an expensive robotics system to allow for more decorative door products in the deluxe product line. The CFO suggested that an ABC analysis could be valuable to help evaluate a product mix and promotion strategy for the next sales campaign. The following information for 2019 was provided after consulting with operating personnel.
Activity
Activity Measure
Activity costs
Setups
Number of setups
$2,900,000
100
400
Material handling
Number of handling hours
$44,100,000
300,000
Designing
Number of design hours
$5,000,000
12,000
8,000
$52,000,000
Required - Using the current system, determine the estimated total cost of manufacturing one unit for each type of door and profit per unit for each type of door.
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