Jordan Cameras, Incorporated manufactures two models of cameras. Model ZM has a zoom lens; Model DS has a fixed lens. Jordan uses an activity-based costing system. The following are the relevant cost data for the previous month: Direct Cost per Unit Direct materials Direct labor Category Unit level Batch level Product level Facility level Total Estimated Cost Model ZM $ 20.70 29.40 Cost Driver Model DS $7.00 9.00 $ 25,960 Number of units Number of setups. 49,920 90,000 Number of TV commercials 180,000 Number of machine hours $ 345,880 Amount of Cost Driver ZM: 2,500 units; DS: 9,300 units ZM: 26 setups; DS: 26 setups ZM: 14; DS: 11 ZM: 300 hours; DS: 600 hours Jordan's facility has the capacity to operate 2,700 machine hours per month. Required a. Compute the cost per unit for each product. b. The current market price for products comparable to Model ZM is $118 and for DS is $68. If Jordan sold all of its products at the market prices, what was its profit or loss for the previous month? c. A market expert believes that Jordan can sell as many cameras as it can produce by pricing Model ZM at $113 and Model DS at $34. Jordan would like to use those estimates as its target prices and have a profit margin of 30 percent of target prices. What is the target cost for each product?
Jordan Cameras, Incorporated manufactures two models of cameras. Model ZM has a zoom lens; Model DS has a fixed lens. Jordan uses an activity-based costing system. The following are the relevant cost data for the previous month: Direct Cost per Unit Direct materials Direct labor Category Unit level Batch level Product level Facility level Total Estimated Cost Model ZM $ 20.70 29.40 Cost Driver Model DS $7.00 9.00 $ 25,960 Number of units Number of setups. 49,920 90,000 Number of TV commercials 180,000 Number of machine hours $ 345,880 Amount of Cost Driver ZM: 2,500 units; DS: 9,300 units ZM: 26 setups; DS: 26 setups ZM: 14; DS: 11 ZM: 300 hours; DS: 600 hours Jordan's facility has the capacity to operate 2,700 machine hours per month. Required a. Compute the cost per unit for each product. b. The current market price for products comparable to Model ZM is $118 and for DS is $68. If Jordan sold all of its products at the market prices, what was its profit or loss for the previous month? c. A market expert believes that Jordan can sell as many cameras as it can produce by pricing Model ZM at $113 and Model DS at $34. Jordan would like to use those estimates as its target prices and have a profit margin of 30 percent of target prices. What is the target cost for each product?
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter6: Process Costing
Section: Chapter Questions
Problem 45E: Cassien Inc. manufactures products that pass through two or more processes. During June, equivalent...
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Question
Transcribed Image Text:Jordan Cameras, Incorporated manufactures two models of cameras. Model ZM has a zoom lens; Model DS has a fixed lens. Jordan
uses an activity-based costing system. The following are the relevant cost data for the previous month:
Direct Cost per Unit
Direct materials
Direct labor
Category
Unit level
Batch level
Product level
Facility level
Total
Estimated
Cost
$ 25,960
49,920
90,000
180,000
$ 345,880
Model ZM
$ 20.70
29.40
Cost Driver
Model DS
$7.00
9.00
Number of units
Number of setups
Number of TV commercials
Number of machine hours
Amount of Cost Driver
ZM: 2,500 units; DS: 9,300 units
ZM: 26 setups; DS: 26 setups
ZM: 14; DS: 11
ZM: 300 hours; DS: 600 hours
Jordan's facility has the capacity to operate 2,700 machine hours per month.
Required
a. Compute the cost per unit for each product.
b. The current market price for products comparable to Model ZM is $118 and for DS is $68. If Jordan sold all of its products at the
market prices, what was its profit or loss for the previous month?
c. A market expert believes that Jordan can sell as many cameras as it can produce by pricing Model ZM at $113 and Model DS at $34.
Jordan would like to use those estimates as its target prices and have a profit margin of 30 percent of target prices. What is the
target cost for each product?
Transcribed Image Text:Complete this question by entering your answers in the tabs below.
Required A
Required B Required C
The current market price for products comparable to Model ZM is $118 and for DS is $68. If Jordan sold all of its products at
the market prices, what was its profit or loss for the previous month? (Round intermediate calculations to 2 decimal places.
Loss amounts should be indicated by a minus sign.)
Model ZM
Model DS
Amount
< Required A
Required C >
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