Question

Lawton Corp. manufactures computer desks in its Philadephia, Pennsylvania, plant. The company uses activity-based costing to allocate all manufacturing conversion costs (direct labor and manufacturing overhead). Its activities and related data follow. (Click the icon to view the activity areas and related data.) Read the requirements Requirement 1. Compute the per-unit manufacturing product cost of Standard desks and Unpainted desks. (Complete all input fields. Enter a "0" for any zero amounts. Round your answers to the nearest whole dollar.) Standard Desk Unpainted Desk Direct materials Materials handling Assembling Painting Total manufacturing cost Number of units Manufacturing cost per unit Requirement 2. Premanufacturing activities, such as product design, were assigned to the Standard desks at $4 each and to the Unpainted desks at $2 each. Similar analyses were conducted of post-manufacturing activities such as distribution, marketing, and customer service. The post-manufacturing costs were $22 per Standard and $19 per Unpainted desk. Compute the full product costs per desk. Standard Desk Unpainted Desk

Answer 1

Requirement 1:

Particulars	Standard Desk	Unpainted Desk
Direct Materials	$110,400	$47,450
Materials handling	$109,350	$28,350
Assembling	$96,000	$11,200
Painting	$36,750	$14,700
Total Manufacturing cost	$352,500	$101,700
Number of Units	7,500	3,000
Manufacturing cost per unit	$47.00	$33.90

Working Notes:

1. Materials handling

Standard desk = 121,500 parts * $0.90 = $109,350

Unpainted desk = 31,500 parts * $0.90 = $28,350

2. Assembling

Standard desk = 6,000 hours * $16 = $96,000

Unpainted desk = 700 hours * $16 = $11,200

3. Painting

Standard desk = 7,500 Units * $4.90 = $36,750

Unpainted desk = 3,000 Units * $4.90 = $14,700

Requirement 2:

Particulars	Standard Desk	Unpainted Desk
Manufacturing cost per unit	$47.00	$33.90
Pre-manufacturing cost per unit	$4.00	$2.00
Post-manufacturing cost per unit	$22.00	$19.00
Full product cost per unit	$73.00	$54.90

Requirement 3:

Manufacturing product cost are reported in the external financial statements. Managers use full product costing for decisions such as pricing and product emphasis. Full product costs include the cost of pre-manufacturing and post-manufacturing costs that are expensed as incurred for external reporting. However, these costs often are used for internal decisions.

Requirement 4:

Full Product cost per unit	$73.00
Add: Desired profit per unit	$41.00
Sales price per unit- Standard desk	$114.00

All the best...