Question

# Use the following statement: Product A Product B Total sales volume (units) 100 180 280 Revenue...

Use the following statement:

 Product A Product B Total sales volume (units) 100 180 280 Revenue \$12,000 \$72,000 \$84,000 COGS: direct materials \$2,400 \$4,800 \$7,200 direct labor \$4,800 \$12,000 \$16,800 MOH \$50,400 Gross margin \$9,600

Required:

(a) allocate the shared MOH (\$50,400) among product A and product B, using direct labor dollars as the allocation base.
MOH allocated to A=\$
MOH allocated to B=\$

(b) using the allocated costs from (a), compute the gross margin for product A and product B.
If you get a negative number, enter it with a minus sign, i.e., enter negative \$1000 as -1000, not as (\$1000)
gross margin for A=\$
gross margin for B=\$

(c) allocate the shared MOH (\$50,400) among product A and product B, using the number of units as the allocation base.
MOH allocated to A=\$
MOH allocated to B=\$

(d) using the allocated costs from (c), compute the gross margin for product A and product B.
If you get a negative number, enter it with a minus sign, i.e., enter negative \$1000 as -1000, not as (\$1000)
gross margin for A=\$
gross margin for B=\$

a) overhead rate per DL\$  = total overhead / total direct labour

= 50,400 / 16,800

= 3 per DL\$

allocated to A = 4,800 x 3 = \$14,400

allocated to B = 12,000 x 3 = \$36,000

b) gross margin of A = sale - material - labor - MOH

= 12,000 - 2,400 - 4,800 -14,400

= -9,600

gross margin of B = sale - material - labor - MOH

= 72,000 - 4,800- 12,000 -36,000

= 19,200

= 50,400 / 280

= 180 per unit

allocated to A = 100 x 180 = 18,000

allocated to B = 180 x 180 = 32,400

d) gross margin of A = sale - material - labor - MOH

= 12,000 - 2,400 - 4,800 -18,000

= -13,200

gross margin of B = sale - material - labor - MOH

= 72,000 - 4,800- 12,000 -32,400

= 22,800

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