Manchester Technology, Inc. manufactures several different types of printed circuit boards; however, two of the boards account for the majority of the company's sales, The first of these boards, a television circuit board, has been a standard in the industry for several years. The market for this type of board is competitive and price-sensitive. Manchester plans to sell 65,000 of the TV boards in 20x1 at a price of $150 per tnt. The second high-volume product, a personal computer circuit board, is @ recent addition to Manchester's product line. Because the PC board incorporates the latest technology, it can be sold at a premium price. The 20x1 plans include the sale of 40,000 PC boards st $300 per unit. ‘Manchester's management group is meeting to discuss how to spend the sales and promotion dollars for 20x) ‘The sales manager believes that the market share for the TV board could be expanded by concentrating Manchester's promotional efforts in this area. In response to this suggestion, the production manager said, "Why don’t you go after a bigger market for the PC board? The cost sheets that I get show that the contribution from the PC board is ‘more than double the contribution from the TV board. 1 know we get a premium price for the PC board. Selling it should help overall profitability.” ‘The cost-aecounting system shows thatthe following costs apply to the PC and TV boards. Pe Board TW Board Direct material ee $140 $20 Diect labor : : : ‘he 15h Mactine tina i . Bo 15h 5h, i is lirect-t Fe variable overhead is costs in the old standard cost figures.” Dedueted AiudBudgeted Annual Budgeted Cost Cost Driver: eee ecreret : Name pats.... Posing Wet 2200002. nabs Pecan stra Milton 20000. ge bae ve Ati 300 os bcs. aris Hares vat dpi Poors 000002) $6600 pens Gotan, Rte.) femme, cowie | Nations obese ea. Haig nen Nie ts Neus ston ei ( Wie sckeing Manger. Paar ‘Required per Unit ne : ain erin ol tosis cinco {coree-o HEC DR RE OES Required: 1. Identify at lest four general advantages associated with activity-base costing. 22. On tie basis of Manchester's unit cost data giver in the problem, calelae the otal amit that each of he ing fined eos an profi 20x {ner words, oe cach pack _ Tine, calculate the total sales rever product's total contribiiion margin. ee : 3. Repeat requirement) but ‘now use ie cost data fro le activity based costing system. 4. Explain how a comparison ofthe ress ofthe tw6 costing moiiods may jnpact the decisions made Py Manchester's management group.Springsteen Company manufactures guitars. The company wes standard job-orde cost- ounting system in two production departments. ln the Construction Departmest, the j ‘wooden guitars are built by highly skilled cafsmen and coated with several ayes of nc ‘ger. Then the units are wansferred tothe Finishing Department, where the bridge ofthe he ing Deprmen agen ll Te pao wl ed Construction Department Fishing Department a (Casi guitar but om (dg ana tin veneered wood) oe stlached guitar tunes fd repected) ach finished guitar contains seven pounds of veneered wood In addition, one pound of wood is typically wasted in the production process, The veneered wood used nthe guitrs has standard price of S12 per pound. The other pars needed to complete each guitar, such as the bridge and strings, cast 15 per guitar. The labor standards for Spring teen's wo production departments are as follows CConstretion Department: 6 hours of direct labor a $20 per hour Finishing Department 3 hours of direct labor at $15 per hour “The following pertains tothe month of July. 11, There were no beginning or ending work-in-process inventories in either production department. 2. There was no beginning finished-goods inventory. 3 Actual production was 500 guitars, and 300 guitars were sold on account for $400 each. “A. ‘The company purchased 6,000 pounds of veneered wood ata price of $12.50 per pound 5, Actual usage of veneered wood was 4,500 pounds. Enough parts (ridges anid stings) to finish 600 guitars were purchased at a cost of $9000. é J The Construction Department used 2,850 dirct-labor hours, The total diect-Ibor cbs inthe Construction De= partment was $54,150. . ss. TheFinshing Department used 1570 divect-Iabor hour. The aa direct tbor ost in that department as $25,120, 19, ‘Theve were no direct-matrial variances in the Finishing Department reper sched tht comptes he stad cts fie mse at vat abr each production dea Pape tre exhibit that compa the July dres- material ie aor valncs inthe Cositrocton Di parent and dhe July diret-abor variances inthe Finjshing Deparment. ee ‘cost variance report for July