Determine the gross profit margin for each product produced

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Reference no: EM132046045

Total Costs Selling Allocated: Cost per Unit: Total Cost Costs per Price per Units Traditional Traditional Allocated: Unit: Product Unit Produced Costing Costing ABC ABC GS-157 $19.30 120,000 $1,600,000 $13.33 $1,500,000 $12.50 HS-241 17.50 90,000 1,100,000 12.22 1,050,000 11.67 OS-367 15.10 40,000 400,000 10.00 550,000 13.75 Totals $3,100,000 $3,100,000 Required a. Determine the gross profi t margin for each product produced based on the ABC data [(Selling price 2 ABC cost per unit) 3 Units produced]. b. Determine the gross profi t margin for each product produced based on the traditional cost- ing data [(Selling price 2 Traditional cost per unit) 3 Units produced]. c. Provide an explanation as to why the cost of OS-367 may have increased under the ABC system while the cost of GS-157 decreased. d. Suggest what action management might take with respect to the discoveries resulting from the ABC versus traditional costing analysis. Assume that Drilling Innovations expects to produce a gross profit margin on each product of at least 30 percent of the selling price.Total Costs Selling Allocated: Cost per Unit: Total Cost Costs per Price per Units Traditional Traditional Allocated: Unit: Product Unit Produced Costing Costing ABC ABC GS-157 $19.30 120,000 $1,600,000 $13.33 $1,500,000 $12.50 HS-241 17.50 90,000 1,100,000 12.22 1,050,000 11.67 OS-367 15.10 40,000 400,000 10.00 550,000 13.75 Totals $3,100,000 $3,100,000 Required a. Determine the gross profi t margin for each product produced based on the ABC data [(Selling price 2 ABC cost per unit) 3 Units produced]. b. Determine the gross profit margin for each product produced based on the traditional costing data [(Selling price 2 Traditional cost per unit) 3 Units produced]. c. Provide an explanation as to why the cost of OS-367 may have increased under the ABC system while the cost of GS-157 decreased. d. Suggest what action management might take with respect to the discoveries resulting from the ABC versus traditional costing analysis. Assume that Drilling Innovations expects to produce a gross profit margin on each product of at least 30 percent of the selling price.

Reference no: EM132046045

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