# Tent Master produces two lines of tents sold to outdoor enthuslasts. The tents are cut to...

## Question:

Tent Master produces two lines of tents sold to outdoor enthuslasts. The tents are cut to speclfications Itn department A. In department B the tents are sewn and folded. The activities, costs, and drivers assoclated With these two manufacturing processes and the company's production support activities follow.

Department APattern alignment$113,280Batches960 Cutting55,440Machine hours13,200 Moving product154,800Moves3,600$323,520
Department BSewing$492,800Direct labor hours6,400 Inspecting45,000Inspectins750 Folding86,850Units28,950$624,650
SupportDesign$484,000Modification orders440 Providing space100,000Square feet10,000 Materials handling340,300Square yards830,000$924,300

Additional production Information on the two lines of tents follows.

 Pup Tent Pop-up Tent Units produced 19,300 units 9,650 units Moves 1,200 moves 2,400 moves Batches 240 batches 720 batches Number of inspections 300 inspections 450 inspections Machine hours 8,000 LH 5,200 MH Direct labor hours 4,000 DLH 2,400 DLH Modification orders 110 modification orders 330 modification orders Space occupied 5,000 square feet 5,000 square feet Material required 490,000 square yards 340,000 square yards

1. Using a plantwide overhead rate based on direct labor hours, compute the overhead cost that is assigned to each pup tent ad each pop-up tent.

2. Using the plantwide overhead rate, determine the total cost per unit for the two products if the direct materials and direct labor cost is $18 per pup tent and$22 per pop-up tent.

3. Assume the market price of the pup tent is $75 and the market price of the pop-up tent is$160, determine the gross profit/loss per unit for each tent assuming overhead is assigned using the plantwide rate.

Will the product line be retained or eliminated?

4. Using ABC, compute the total cost per unit for each tent if the direct labor and direct materials cost is $18 per pup tent and$22 per pop-up tent.

5. Assume if the market price is $75 per pup tent and$160 per pop-up tent, determine the gross profit?/loss per unit for each tent.

## Using Traditional Costing & Activity-Based Costing:

Traditional and activity-based costing are two methods that can be used to allocate manufacturing costs to products in a manufacturing company. The concept used by the two methods is similar but the activity-based system uses more cost allocations.

1.

 $292.57 Estimated overhead cost$1,872,470 Estimated direct labor hours 6,400 Plantiwde overhead rate

Pup tent Pop-up tent
Direct labor hours used 4,000 2,400
Plantiwde overhead rate $292.57 per DLH$292.57 per DLH
Overhead allocated $1,170,294$702,176
Units produced 19,300 9,650
Overhead per unit $60.64$72.76

2.

Pup tent Pop-up tent
Direct materials and labor per unit $18.00$22.00
Overhead per unit $60.64$72.76
Total cost per unit $78.64$94.76

3.

Pup tent Pop-up tent
Selling price per unit $75.00$160.00
Total cost per unit $78.64$94.76
Profit per unit $(3.64)$65.24

4. & 5.

Pup Tent
Allocated to
Pop-up Tent
Department APattern alignment$113,280Batches960$118 pre batch $28,320$84,960
Cutting55,440Machine hours13,200 44.20 per machine hours $33,600$21,840
Moving product154,800Moves3,600 $43 pre move$51,600 $103,200 Department BSewing$492,800Direct labor hours6,400 $77 per DLH$308,000 $184,800 Inspecting45,000Inspectins750$60 per inspection $18,000$27,000
Folding86,850Units28,950 $3 per unit$57,900 $28,950 SupportDesign$484,000Modification orders440 $1,100 per order$121,000 $363,000 Providing space100,000Square feet10,000$10 per sq ft $50,000$50,000
Materials handling340,300Square yards830,000 $0.41 per sq yrd$200,900 $139,400 Total overhead allocated$1,872,470 $869,320$1,003,150
Units produced 19,300 9,650
Overhead per unit $45.04$103.95
Direct materials and labor per unit $18.00$22.00
Total cost per unit $63.04$125.95
Selling price per unit $75.00$160.00
Profit per unit $11.96$34.05