Determine the estimated total cost of manufacturing one unit

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Question - Come-On-In Manufacturing produces two types of entry doors: Standard and Deluxe. The assignment basis for manufacturing overheads has been direct labour hours. For 2019, Come-On-In compiled the following data for the two products:

 

Standard

Deluxe

Sales units

400,000 Doors

50,000 Doors

Sales price per unit

$475.00

$710.00

Direct material and labour costs per unit

$130.00

$180.00

Manufacturing overhead costs per unit

$120.00

$80.00

Direct labour hours

40,000 hours

10,000 hours

Last year, Come-On-In Manufacturing purchased an expensive robotics system to allow for more decorative door products in the deluxe product line. The CFO suggested that an ABC analysis could be valuable to help evaluate a product mix and promotion strategy for the next sales campaign. The following information for 2019 was provided after consulting with operating personnel.

Activity

Activity Measure

Activity costs

Standard

Deluxe

Setups

Number of setups

$2,900,000

100

400

Material handling

Number of handling hours

$44,100,000

300,000

300,000

Designing

Number of design hours

$5,000,000

12,000

8,000

 

 

$52,000,000

 

 

Required - Using the current system, determine the estimated total cost of manufacturing one unit for each type of door and profit per unit for each type of door.

Reference no: EM133063869

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