Please find the Total CM for both categories as per Requirement 3 in the question
Attachment 1
Attachment 2
mancnester Iecnnology, Inc. manuractures several olrrerent types or printed CII’CUIT. ooaros; nowever, two or tne boards account ror tnemajority of the company’s sales. The first of these boards, a television circuit board, has been a standard in the industry for severalyears. The market for this type of board is competitive and price-sensitive. Manchester plans to sell 85,000 of the TV boards in 20×1 ata price of $510 per unit. The second high-volume product, a personal computer circuit board, is a recent addition to Manchester’sproduct line. Because the PC board incorporates the latest technology, it can be sold at a premium price. The 20×1 plans include thesale of 60,000 PC boards at $855 per unit. Manchester’s management group is meeting to discuss how to spend the sales and promotion dollars for 20×1. The sales managerbelieves that the market share for the TV board could be expanded by concentrating Manchester’s promotional efforts in this area. Inresponse to this suggestion, the production manager said, "Why don’t you go after a bigger market for the PC board? The cost sheetsthat | get show that the contribution from a PC board is significantly larger than the contribution from a TV board. I know we get apremium price for the PC board. Selling it should help overall profitability." The cost-accounting system shows that the following costs apply to the PC and TV boards. PC Board TV Board Direct material $249 $159Direct labor 4 . 0 hr. 1.5 hr.Machine time 1 . 5 hr. 1.5 hr. Variable manufacturing overhead is applied on the basis of direct-labor hours. For 20×1, variable overhead is budgeted at $2,540,000,and direct-labor hours are estimated at 385,875. The hourly rates for machine time and direct labor are $38 and $46, respectively. Thecompany applies a material-handling charge at 10 percent of material cost. This material-handling charge is not included in variablemanufacturing overhead. Total 20×1 expenditures for direct material are budgeted at $28,455,000. Andrew Fulton, Manchester’s controller, believes that before the management group proceeds with the discussion about allocatingsales and promotional dollars to individual products, it might be worthwhile to look at these products on the basis of the activitiesinvolved in their production. Fulton has prepared the following schedule to help the management group understand this concept. "Using this information," Fulton explained, "we can calculate an activity-based cost for each TV board and each PC board and thencompare it to the standard cost we have been using. The only cost that remains the same for both cost methods is the cost of directmaterial. The cost drivers will replace the direct labor, machine time, and overhead costs in the old standard cost figures.” Budgeted Annual Activity Budgeted Cost Cost Driver for Cost DriverProcurement $ 1,000,000 Number of parts 10,090,500 partsProduction scheduling 540 , 000 Number of boards 152 , 250 boardsPackaging and shipping 1,080,000 Number of boards 152,250 boardsTotal S 2,620,000 Machine setup 5 972 ,000 Number of setups 367,500 setupsHazardous waste disposal 136 , 000 Pounds of waste 28 , 770 poundsQuality control 1 , 240 , 000 Number of inspections 5 19 , 750 inspectionsGeneral supplies 1.92 , 000 Number of boards 152 , 250 boardsTotal S 2,540,000 Machine insertion S 3,400,000 Number of parts 7, 032,000 partsManual insertion 10,000,000 Number of parts 2,939,000 partsWave—soldering 364 , 000 Number of boards 152 , 250 boards Total $13,764,000

Leave a Reply

Your email address will not be published. Required fields are marked *