Accounting Help Needed?

Question

Come-on-In Manufacturing produces two types of entry doors: deluxe and standard. The assignment basis for support costs has been direct labour dollars. For 2008, Come-On-In compiled the following data for the two products:

Deluxe Standard

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Sales units 50,000 400,000

Sales price per unit $650 $475

Direct materials and labour costs per unit $180 $130

Manufacturing support costs per unit $80 $120

Required:

a. Using the current system, state each of the following:

estimated total cost of manufacturing one unit for each type of door (1 mark)

estimated profit per unit for each type of door (1 mark)

Answer 1

Coco, I'll walk you through one and then you have to do the rest by yourself.

For the Deluxe estimated total cost of manufacturing for one unit, let's start with the the direct costs.  You are told are they are $180.  You are also told you have support costs/unit of $80.  Direct costs plus support costs (total costs/unit) equals $180 + $80, or $260/unit for the Deluxe model.

Perform the same calculation for the Standard model - add the direct costs to the support costs.

The estimated profit/unit will be the selling price/unit less the total costs.   You will need to calculate this for each model.  

To aid you in seeing this, set up two columns, label one column deluxe, on column standard.  The next row down, list the selling price per unit.  Then list the direct costs/unit on the next row.  Go one more row down and list the support costs/unit.  Add the two costs together and list that on the next row down as total costs/unit.  Subtract the total costs from the selling price/unit and on the next row down put that difference in the row titled profit/unit.

Notice you did not need the total number of sales units for each model, since you were given selling price/unit and the two cost components/unit.

Answer 2

A.) 260 250

B.) 390 225

But I'm not a math wiz.