Efficient Electronics Corporation Produces Two Types of Electronic Data Organizers

question 153

Essay

Efficient Electronics Corporation produces two types of electronic data organizers: basic and deluxe.The following information about the production process is available:

	Basic	Deluxe
Number produced	900,000	500,000
Machine hours	75,000	30,000
Inspection hours	9,000	45,000
Revenues	$63,000,000	$45,000,000
Direct costs	$38,000,000	$31,000,000

Total factory overhead is $10,000,000.Of this overhead,$4,000,000 is related to utilities and the remainder is related to quality control.
a.Determine the total overhead cost assigned to each type of data organizer using machine hours as the allocation base.Calculate the gross profit per unit for each product.
b.Determine the total overhead cost assigned to each type of data organizer if overhead is assigned using allocation bases appropriate to the overhead costs.Calculate the gross profit per unit of each product.
c.Explain why the unit cost for each model is different between the two methods of allocation.

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Definitions:

Nucleolus

A structure found within the nucleus of the cell.

RNA Synthesis

The process of synthesizing ribonucleic acid (RNA) from a DNA template, a critical step in gene expression and protein production.

Cell Membrane

The semipermeable membrane surrounding the cytoplasm of a cell, which regulates the movement of substances in and out of the cell.

Cytoplasm

The material within a living cell, excluding the nucleus, that contains the organelles and facilitates cellular processes.