Solution for Classic Pen

Case playing field continent write c aller 1- represent of production of the draw ups match to rudiment method collateral FINGE BENEFICT INDIRECT LABOR TOTAL indirect comprehend Indirect wear down Computer System Other bash organic command processing overhead touchstone Overhear Rate 8,000 20,000 28,000 take reachs Setup clock time Administration Run Machines 14,000 11,200 2,800 8,000 2,000 14,000 22,000 11,200 4,800 14,000 cl 526 4 10,000 146. 67 21. 29 1,200. 00 1. 40 list 28,000 10,000 14,000 52,000 Overhead distribution among the cost Pool Amount of overhead 22,000. 00 11,200. 00 4,800. 00 14,000. 00 2,000. 00 100,000 measure 150 526 4 10,000 Rate Amount of overhead 8,000 100,000 0. 08 quantity 100,000 piquant occupation Runs Setup Time Administration Run Machines Total Overhead by saveitentiary Quantity of pen Overhead by unit of pen black 0. 50 0. 20 0. 08 0. 38 1. 16 Blue 7,333. 33 4,258. 56 1,200. 00 7,000. 00 19,791. 89 50,000 0. 40 Black 7,333. 33 1,06 4. 64 1,200. 00 5,600. 00 15,197. 97 40,000 0. 38 cerise 5,573. 33 4,854. 75 1,200. 00 1,260. 00 12,888. 09 9,000 1. 43 majestic 1,760. 00 1,022. 05 1,200. 00 140. 00 4,122. 05 1,000 4. 12 Blue 4,000. 00 50,000 . 08 Black 3,200. 00 40,000 0. 08 vehement 720. 00 9,000 0. 08 empurpled 80. 00 1,000 0. 08 taper Fringe make headway distribution among pen broadcast Fringe arrive at Quantity of pen govern Fringe take in by pen court of Production Material Cost Direct Labor Direct Fringe realise Overhead Cost Cost of Production 0. 50 0. 20 0. 08 0. 40 1. 18 Red 0. 52 0. 20 0. 08 1. 43 2. 23 Purple 0. 55 0. 20 0. 08 4. 12 4. 95 2- Actions that lead be interpreted by Classic Pen Company As shown by the gameboard below, the traditional cost shows the company is realizing benefit for all its pens.Blue Material Cost Direct Labor Overhead Cost Cost of Production Quantity of pen Cost of Production according to the Traditionnal tangible Unit interchange Price Profit/ divergence $ Bl ack 25,000 20,000 10,000 8,000 30,000 24,000 65,000. 00 52,000. 00 50,000 40,000 1. 30 1. 30 1. 50 1. 50 0. 20 $ 0. 20 $ Red Purple 4,680 550 1,800 200 5,400 600 11,880. 00 1,350. 00 9,000 1,000 1. 32 1. 35 1. 55 1. 65 0. 23 $ 0. 30 But with rudiment Method we have realized that the unit change value of the Red pen and Purple pen respectively $1. 5 and $1. 65 argon less than the cost of production, therefore we expect that the Classic Pen Company will increase the unit selling price of these two pens. Blue Material Cost Direct Labor Direct Fringe Benefit Overhead Cost Cost of Production according to ABC real Unit Selling Price Profit/Loss $ 0. 50 0. 20 0. 08 0. 40 1. 18 1. 50 0. 32 $ Black 0. 50 0. 20 0. 08 0. 38 1. 16 1. 50 0. 34 $ Red 0. 52 0. 20 0. 08 1. 43 2. 23 1. 55 (0. 68) $ Purple 0. 55 0. 20 0. 08 4. 12 4. 95 1. 65 (3. 30)Solution for Classic PenCase Study Classic Pen Company 1- Cost of production of the pens according to ABC method INDIRECT FINGE BENEFICT INDIRECT LABO R TOTAL indirect Labor Indirect Labor Computer System Other Overhead Total overhead Quantity Overhear Rate 8,000 20,000 28,000 Production Runs Setup Time Administration Run Machines 14,000 11,200 2,800 8,000 2,000 14,000 22,000 11,200 4,800 14,000 150 526 4 10,000 146. 67 21. 29 1,200. 00 1. 40 Total 28,000 10,000 14,000 52,000 Overhead distribution among the cost Pool Amount of overhead 22,000. 00 11,200. 00 4,800. 00 14,000. 00 2,000. 00 100,000 Quantity 150 526 4 10,000 Rate Amount of overhead 8,000 100,000 0. 08 Quantity 100,000 Blue Production Runs Setup Time Administration Run Machines Total Overhead by pen Quantity of pen Overhead by unit of pen Black 0. 50 0. 20 0. 08 0. 38 1. 16 Blue 7,333. 33 4,258. 56 1,200. 00 7,000. 00 19,791. 89 50,000 0. 40 Black 7,333. 33 1,064. 64 1,200. 00 5,600. 00 15,197. 97 40,000 0. 38 Red 5,573. 33 4,854. 75 1,200. 00 1,260. 00 12,888. 09 9,000 1. 43 Purple 1,760. 00 1,022. 05 1,200. 00 140. 00 4,122. 05 1,000 4. 12 Blue 4,000. 00 50,000 . 08 Black 3,200. 00 40,000 0. 08 Red 720. 00 9,000 0. 08 Purple 80. 00 1,000 0. 08 Direct Fringe Benefit distribution among pen Direct Fringe Benefit Quantity of pen Direct Fringe Benefit by pen Cost of Production Material Cost Direct Labor Direct Fringe Benefit Overhead Cost Cost of Production 0. 50 0. 20 0. 08 0. 40 1. 18 Red 0. 52 0. 20 0. 08 1. 43 2. 23 Purple 0. 55 0. 20 0. 08 4. 12 4. 95 2- Actions that will be taken by Classic Pen Company As shown by the table below, the traditional cost shows the company is realizing benefit for all its pens.Blue Material Cost Direct Labor Overhead Cost Cost of Production Quantity of pen Cost of Production according to the Traditionnal Actual Unit Selling Price Profit/Loss $ Black 25,000 20,000 10,000 8,000 30,000 24,000 65,000. 00 52,000. 00 50,000 40,000 1. 30 1. 30 1. 50 1. 50 0. 20 $ 0. 20 $ Red Purple 4,680 550 1,800 200 5,400 600 11,880. 00 1,350. 00 9,000 1,000 1. 32 1. 35 1. 55 1. 65 0. 23 $ 0. 30 But with ABC Method we have realized tha t the unit selling price of the Red pen and Purple pen respectively $1. 5 and $1. 65 are less than the cost of production, therefore we expect that the Classic Pen Company will increase the unit selling price of these two pens. Blue Material Cost Direct Labor Direct Fringe Benefit Overhead Cost Cost of Production according to ABC Actual Unit Selling Price Profit/Loss $ 0. 50 0. 20 0. 08 0. 40 1. 18 1. 50 0. 32 $ Black 0. 50 0. 20 0. 08 0. 38 1. 16 1. 50 0. 34 $ Red 0. 52 0. 20 0. 08 1. 43 2. 23 1. 55 (0. 68) $ Purple 0. 55 0. 20 0. 08 4. 12 4. 95 1. 65 (3. 30)