Capable Golf Cart, Inc. (CGC) manufactures two models of golf cart: LX and EX. The budget data for next month is available. LX EX Total Units produced 50 30 80 Direct labor hours 2,000 3,000 5,000 Machine hours 1,500 1,200 2,700 Direct materials $125,000 $90,000 $215,000 Direct labor 90,000 60,000 150,000 Manufacturing overhead 202,500 Total $567,500 Required: 1. Compute the reported unit cost for each product if direct labor hours are used as the allocation base. 2. Compute the reported unit cost for each product if direct labor costs are used as the allocation base. 3. Compute the reported unit cost for each product if machine hours are used as the allocation base.

Solution :

1. Allocation on the basis of

                                              LX                               EX

Direct Material                    125000                       90000

Direct cost                  90000                       60000

Manufacturing overhead                              

                              (202500/5000 x 2000)     (202500/5000 x 3000)

Total cost                             296000                       271500

Units produced                       50                               30

Cost per unit                          5920                           9050

2. Allocation on the basis of :

                                              LX                               EX

Direct Material                    125000                       90000

Direct labor cost                  90000                       60000

Manufacturing overhead    121500                       81000

                        (202500/150000 x 90000)     (202500/150000 x 60000)

Total cost                             336500                       231000

Units produced                       50                               30

Cost per unit                          6730                           7700

3. Allocation on the basis of

                                              LX                               EX

Direct Material                    125000                       90000

Direct labor cost                  90000                       60000

Manufacturing overhead    112500                        90000

                              (202500/2700 x 1500)     (202500/2700 x 1200)

Total cost                             327500                       240000

Units produced                       50                               30

Cost per unit                          6550                          8000

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation:

answer: 11/12

step-by-step explanation: 4 1/4 and 3 1/3 is equivalent to 4 3/12 and 3 4/12. 4 3/12 - 3 4/12 =11/12