Question

Solomon 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 $ 25.40 $ 38.80 Direct labor $ 31.40 $ 53.80 Allocated overhead $ 15.70 $ 20.80 Total units produced and sold 5,400 9,400 Total sales revenue $ 491,400 $ 1,259,600 Solomon allocates production overhead using activity-based costing. It allocates delivery expense and sales commissions, which amount to $61,000 per quarter, to the two products equally. Required Compute the per-unit cost for each product. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Compute the profit for each product.

Answer 1

The Basco per unit cost is $5.65

The Shimano per unit cost is $3.24

The profit of Basco is $99,900. The profit of Shimano is $193,640

Step-by-step explanation:

In order to calculate the per-unit cost for each product we would have to make the following calculations according to the given data:

Basco boards Shimano boards

Direct material $25.40 $38.80

Direct labor $31.40 $53.80

Allocated overhead $15.70 $20.80

Delivery expenses and sales commission $5.65 $3.24

Unit cost $78.15 $116.64

Allocation of delivery expenses and sales commission on an equal basis = $61,000 / 2 = $30,500.

Basco per unit cost = $30,500 / 5,400 = $5.65

Shimano per unit cost = $30,500 / 9,400 = $3.24

To calculate the profit for each product we would have to make the following calculations:

Basco Shimano

Sales $491,400 $1,259,600

Cost of goods sold $391,500 (5,400 * 72.5) $1,065,960 (9,400 * 116.64)

Profit $99,900 $193,640