Reference no: EM133031989
Problem - Rosie Learns, Inc. manufactures robots and uses an activity-based costing system. Rosie Learns' activities and related data are listed below:
|
Activity
|
Budgeted Cost
|
Allocation Base
|
Predetermined Overhead Allocation Rate
|
|
Materials Handling
|
$230,000
|
Number of Parts
|
$1.50
|
|
Assembly
|
3,200,000
|
Number of assembling direct labor hours
|
16.00
|
|
Finishing
|
150,000
|
Number of finished units*
|
3.00
|
*The number of units receiving the finish activity, not the number of units transferred to Finished Goods Inventory.
Rosie Learns produces two models of robots, the Rosie V and the Rosie X. The Rosie X has fewer parts and requires no finishing work.
|
Product
|
Total Units Produced
|
Total Direct Materials Costs
|
Total Direct Labor Costs
|
Total Number of Parts
|
Total Assembling Direct Labor Hours
|
|
Rosie V
|
3,000
|
54,000
|
67,500
|
8,000
|
4,500
|
|
Rosie X
|
3,500
|
56,000
|
52,500
|
6,000
|
3,500
|
Required -
1. Compute the manufacturing product costs per unit of each model of robot.
2. Suppose that pre-manufacturing activities, such as product design were assigned to Roxie V at $8 each and to Rosie X at $5 each. Similar analyses were done on post-manufacturing actives such as distribution, marketing and customer service. The post-manufacturing costs were $18 for Rosie V and $14 for Rosie X. What is the full product costs per unit?
3. Which product costs are reported in the external financial statements? Which costs are used for management decision making? What is the difference?
4. What price should Rosie Learns set for Rosie X to earn a target net profit of $20 per robot?