Walnut Systems Produces Two Different Products,Product A,which Sells for $120

question 112

Essay

Walnut Systems produces two different products,Product A,which sells for $120 per unit,and Product B,which sells for $180 per unit,using three different activities: Design,which uses Engineering Hours as an activity driver;Machining,which uses machine hours as an activity driver;and Inspection,which uses number of batches as an activity driver.The cost of each activity and usage of the activity drivers are as follows:
Walnut manufactures 10,000 units of Product A and 7,500 units of Product B per month.Each unit of Product A uses $50 of direct materials and $20 of direct labor,while each unit of Product B uses $75 of direct materials and $35 of direct labor.
Required:
a.Calculate the Design activity proportions for Products A and B.
b.Calculate the Machining activity proportions for Products A and B.
c.Calculate the Inspection activity proportions for Products A and B.
d.Determine the indirect costs assigned to Product A.
e.Determine the indirect costs assigned to Product B.
f.Determine the manufacturing cost per unit for Product A.
g.Determine the manufacturing cost per unit for Product B.
h.Determine the gross profit per unit for Product A.
i.Determine the gross profit per unit for Product B.

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Definitions:

Transportation

The act or process of moving people or goods from one place to another using various modes such as vehicles, trains, ships, or airplanes.

Lot Size-based Discounts

Price reductions offered to customers purchasing goods in large quantities or predefined lot sizes.

Volume Discounts

Price reductions given to buyers purchasing large quantities of goods, incentivizing bulk purchases.

EDLP

Stands for Everyday Low Pricing, a retail pricing strategy aiming to offer consumers consistently low prices instead of using short-term promotions.