Question

Gibson Boards produces two kinds of skateboards. Selected unit data for the two boards for the last quarter follow:

	Basco Boards			Shimano Boards
Production costs
Direct materials	$	24.80		$	37.60
Direct labor	$	30.80		$	52.60
Allocated overhead	$	15.40		$	19.60
Total units produced and sold		4,800			8,800
Total sales revenue	$	422,400		$	1,126,400

Gibson allocates production overhead using activity-based costing. It allocates delivery expense and sales commissions, which amount to $58,000 per quarter, to the two products equally.

Required

1. Compute the per-unit cost for each product. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

2. Compute the profit for each product.

Answer 1

ANSWER:

a.

			Basco		Shimano
Materials cost	$24.80 x 4,800	$ 119,040	$37.60 x 8,800	$330,880
Labor cost	$30.80 x 4,800	147,840	$52.60 x 8,800	462,880
Overhead cost	$15.40 x 4,800	73,920	$19.60 x 8,800	172,480
Delivery and selling expense	29,000		29,000
Total		$369,800		$995,240
Divided by # of units		÷ 4,800		÷ 8,800
Cost per unit		$77.04		$113.09

b.     

	Basco	Shimano
Sales	$422,400	$1126,400
Cost of goods sold	369,800	995,240
Profit	$ 52,600	$ 131,160