Homework answers / question archive / Question One ( 85 marks) KDC Company produces Ice creams and Cakes and operates at capacity

Question One ( 85 marks) KDC Company produces Ice creams and Cakes and operates at capacity

Business

Share With

Question One ( 85 marks) KDC Company produces Ice creams and Cakes and operates at capacity. Data related to the two products are presented here: Ice creams Cakes Annual production in units 30,000 60,000 Direct material costs $200,000 $400,000 Direct manufacturing labor costs $75,000 $150,000 Direct manufacturing labor-hours 4,000 8,000 Machine-hours 20,000 40,000 Number of production runs 50 50 Inspection hours 1,500 750 Total manufacturing overhead costs are as follows: Total Machining costs $700.000 Setup costs 100,000 Inspection costs 100,000 Required: 1. Choose a cost driver for each overhead cost pool and calculate the manufacturing overhead cost per unit for each product. (35marks) 2. Compute the manufacturing cost per unit for each product. (35marks) 3. How might KDC's managers use the new cost information from its activity-based costing system to better manage its business? (15marks)