Refer to your answer in E4-23A. In addition to the manufacturing overhead costs, the following data are budgeted for the company’s Standard and Deluxe models for next year:
Sales price per wheel....$420.00 $620.00
DM per wheel....$34.00 $47.00
DL per wheel…. $45.10 $52.50
- Compute the gross profit per wheel if managers rely on the ABC unit cost data computed in E4-23A.
- Compute the gross profit per wheel if the managers rely on the plantwide allocation cost data.
- Which product line is more profitable for Baltimore?
- Why might the controller have expected ABC to pass the cost-benefit test? Were there any warning signs that Biltmore’s old direct-labor-based allocation system was broken?