Koontz Company manufactures two models of industrial components-a Basic model and an Advanced Model. The company considers all of its manufacturing overhead costs to be fixed and it uses plantwide manufacturing overhead cost allocation based on direct labor-hours. Koontz's controller prepared the segmented income statement that is shown below for the most recent year (he allocated selling and administrative expenses to products based on sales dollars Tetal asie 20,00 Advanced Nunber of units produced and sold 10,00 30,000 $3,000, 00 2,100, 0 700, 00 720,00 $2,000, e00 S 5,000, e00 1,350, 00 Sales Cost of goods sold Gross nargin Selling and adninistrative expenses 3,650, e00 1,150, 00 1,200, 000 40, 000 S (20,000) S 170,000 $ 15e,000 Net operating incone (less) Direct laborers are paid $20 per hour. Direct materials cost $40 per unit for the Basic model and $60 per unit for the Advanced model. Koontz is considering a change from plantwide overhead allocation to a departmental approach. The overhead costs in the company's be allocated based on direct labor-hours. To enable further analysis, the controller gathered the following information: elding S 787, se0 Asseble and Pack $ 562, see S1,30, 00 Total Hanufacturing overhead costs Direct labor hours: 20, 10,00 Basie 10,000 5,000 15,0 Advanced Machine hours Basie Advanced 12,000 10,00 12,00 10,000
Koontz Company manufactures two models of industrial components-a Basic model and an Advanced Model. The company considers all of its manufacturing overhead costs to be fixed and it uses plantwide manufacturing overhead cost allocation based on direct labor-hours. Koontz's controller prepared the segmented income statement that is shown below for the most recent year (he allocated selling and administrative expenses to products based on sales dollars Tetal asie 20,00 Advanced Nunber of units produced and sold 10,00 30,000 $3,000, 00 2,100, 0 700, 00 720,00 $2,000, e00 S 5,000, e00 1,350, 00 Sales Cost of goods sold Gross nargin Selling and adninistrative expenses 3,650, e00 1,150, 00 1,200, 000 40, 000 S (20,000) S 170,000 $ 15e,000 Net operating incone (less) Direct laborers are paid $20 per hour. Direct materials cost $40 per unit for the Basic model and $60 per unit for the Advanced model. Koontz is considering a change from plantwide overhead allocation to a departmental approach. The overhead costs in the company's be allocated based on direct labor-hours. To enable further analysis, the controller gathered the following information: elding S 787, se0 Asseble and Pack $ 562, see S1,30, 00 Total Hanufacturing overhead costs Direct labor hours: 20, 10,00 Basie 10,000 5,000 15,0 Advanced Machine hours Basie Advanced 12,000 10,00 12,00 10,000
Chapter5: Process Costing
Section: Chapter Questions
Problem 2PB: The following product costs are available for Kellee Company on the production of eyeglass frames:...
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