Q.199SE
ExpertverifiedRefer to Short Exercise S198. Spectrum Corp. desires a 25% target gross profit after covering all product costs. Considering the total product costs assigned to the Products C and D in Short Exercise S198, what would Spectrum have to charge the customer to achieve that gross profit? Round to two decimal places.
Price for Product C: $400.53
Price for product D: $805.33
Per unit cost for product C = $300.4
As the target gross profit is 25%
So, the present cost should be 75% of the sales price.
Per unit cost for product D = $604
As the target gross profit is 25%
So, the present cost should be 75% of the sales price.
Koehler (see Exercise E1915 and Exercise E1916) makes handheld calculators in two models—basic and professional—and wants to further refine its costing system by allocating overhead using activitybased costing. The estimated $721,000 of manufacturing overhead has been divided into three primary activities: Materials Handling, Machine Setup, and Insertion of Parts. The following data have been compiled:
 Material Handling  Machine Setup  Insertion of Parts  Total 
Overhead costs  $ 45,000  $ 136,000  $ 540,000  $ 721,000 
Allocation base  Number of parts  Number of setups  Number of parts 

Expected usage: 




Basic Model  32 parts per calculator  24 setups per year  32 parts per calculator 

Professional Model  58 parts per calculator  44 setups per year  58 parts per calculator 

Requirement 1
Koehler expects to produce 200,000 basic models and 200,000 professional models. Compute the predetermined overhead allocation rates using activitybased costing. How much overhead is allocated to the basic model? To the professional model?
94% of StudySmarter users get better grades.
Sign up for free