Classic Pen Case Assignment
You should hand in one page of analysis and two sets of helping calculation.
The initially supporting calculations is an ABC program for Vintage Pen, constructed by completing the blanks in the subsequent table. Initially allocate the total expenses in each row to the numerous activities, based upon information in case. Then pick a cost driver and calculate the rate per unit of the cost driver.
Handle Development RunsSet up
Roundabout labor & related fringes14, 00011, 2002, 800$28, 000* Computer systems$8, 000$2, 000$10, 000
Machinery8, 000$ almost 8, 000
Maintenance4, 000$ some, 000
Energy2, 000$ two, 000
Total activity costs22, 00011, 2005, 80014, 000 52, 000
Cost driver# of runsSetup timeDL HoursMachine Hours
Total quantity of price driver150 runs
(Exhibit 2)526 hours200010, 500
Allocation price per device of expense driver146. 6721. 292. 401. 40
*This includes half of the $16, 500 fringe benefits. The partner is linked to direct labor вЂ“ don't forget to include this in your HURUF income declaration!
The second helping calculation is usually an FONEM income declaration showing sales revenue without each type of direct and indirect expense assigned to the four pencil types. Put two lines at the bottom in the income statement: one line shows the working profit per unit for each and every type of pencil based on the ABC calculations, and the other line displays the functioning profit per unit based on the traditional-income calculations in Exhibit 1 of the case.
The analysis includes answers towards the following questions (about one-half page each).
(a)Your ABC analysis should display that crimson pens are very unprofitable, while blue pens earn almost all of the factory's profits. One of the managers at Classic Pen inquiries your evaluation, saying, " I won't be able to believe will be certainly that much big difference in revenue per device between the blue and purple pens....