Question

Question: Tent Pro produces two lines of tents sold to outdoor enthusiasts. The tents are cut to specifications in department A. In department B, the tents are sewn and folded. The activities, costs, and drivers associated with these two manufacturing processes and the company’s production support activities follow.

Process Activity Overhead Cost Driver Quantity

Department A Pattern alignment \( 64,400 Batches 560

Cutting 50,430 Machine hours 12,300

Moving product 100,800 Moves 2,400

\)215,630

Department B Sewing \(327,600 Direct labor hours 4,200

Inspecting 24,000 Inspections 600

Folding 47,880 Units 22,800

\)399,480

Support Design \(280,000 Modification orders 280

Providing space 51,600 Square feet 8,600

Materials handling 184,000 Square yards 920,000

\)515,600

Additional production information on the two lines of tents follows.

Pup Tent Pop-up Tent

Units produced……………. 15,200 units 7,600 units

Moves …………………….... 800 moves 1,600 moves

Batches ………………….... 140 batches 420 batches

Number of inspections .... 240 inspections 360 inspections

Machine hours …….......... 7,000 MH 5,300 MH

Direct labor hours ……… 2,600 DLH 1,600 DLH

Modification orders …… 70 modification orders 210 modification orders

Space occupied ……….. 4,300 square feet 4,300 square feet

Material required ……… 450,000 square yards 470,000 square yards

Required

1. Using a plantwide overhead rate based on direct labor hours, compute the overhead cost that is assigned to each pup tent and 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 \(25 per pup tent and \)32 per pop-up tent.

3. If the market price of the pup tent is \(65 and the market price of the pop-up tent is \)200, determine the gross profit per unit for each tent. What might management conclude about the pup tent?

4. Using ABC, compute the total cost per unit for each tent if the direct labor and direct materials cost is \(25 per pup tent and \)32 per pop-up tent.

5. If the market price is \(65 per pup tent and \)200 per pop-up tent, determine the gross profit per unit for each tent. Comment on the results.

6. Would your pricing analysis be improved if the company used, instead of ABC, departmental rates determined using machine hours in department A and direct labor hours in department B? Explain.

Short answer

Using Plant-wide method

Cost per case (Pup tent):$71.05

Cost per case (Pop-up tent):$88.68

Using ABC method

Cost per case (Pup tent):$58.45

Cost per case (Pop-up tent): $113.86

Step-by-step solution

Calculation of overhead cost

$\begin{array}{rcl}\mathbf{\text{TotalOverheadcost}}& \mathbf{=}& \mathbf{\text{Department1totaloverheadcost}}\mathbf{+}\mathbf{\text{Department2totalOverheadcost}}\mathbf{+}\mathbf{\text{Totalsupportoverheadcost}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{215}\mathbf{,}\mathbf{630}\mathbf{+}\mathbf{\$}\mathbf{399}\mathbf{,}\mathbf{480}\mathbf{+}\mathbf{\$}\mathbf{515}\mathbf{,}\mathbf{600}\\ & \mathbf{=}& \mathbf{\$}\mathbf{1}\mathbf{,}\mathbf{130}\mathbf{,}\mathbf{710}\end{array}$

$\begin{array}{rcl}\mathbf{\text{Plantwideoverheadallocationratebasedondirectlabor}}& \mathbf{=}& \frac{\mathbf{\text{Totaloverheadcost}}}{\mathbf{\text{Totaldirectlaborhour}}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{1}\mathbf{,}\mathbf{130}\mathbf{,}\mathbf{710}}{\mathbf{2}\mathbf{,}\mathbf{600}\mathbf{+}\mathbf{1}\mathbf{,}\mathbf{600}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{1}\mathbf{,}\mathbf{130}\mathbf{,}\mathbf{710}}{\mathbf{4}\mathbf{,}\mathbf{200}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{269}\mathbf{.}\mathbf{217}\end{array}$

$\begin{array}{rcl}\mathbf{\text{TotaloverheadcostforPuptent}}& \mathbf{=}& \mathbf{\text{Plantwiderate}}\mathbf{\times }\mathbf{\text{DirectlaborhourforPupTent}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{269}\mathbf{.}\mathbf{00}\mathbf{\times }\mathbf{1}\mathbf{,}\mathbf{600}\\ & \mathbf{=}& \mathbf{\$}\mathbf{699}\mathbf{,}\mathbf{972}\end{array}$

$\begin{array}{rcl}\mathbf{\text{TotaloverheadcostforPopupTent}}& \mathbf{=}& \mathbf{\text{Plantwiderate}}\mathbf{\times }\mathit{D}\mathbf{\text{irectLaborhourforpopupTent}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{269}\mathbf{.}\mathbf{22}\mathbf{\times }\mathbf{1}\mathbf{,}\mathbf{600}\\ & \mathbf{=}& \mathbf{\$}\mathbf{430}\mathbf{,}\mathbf{752}\end{array}$

Calculation of total cost per unit

$\begin{array}{rcl}\mathbf{\text{TotalCostperunitforPupTent}}& \mathbf{=}& \mathbf{\text{DirectMaterialandDirectLaborcostperunit}}\mathbf{+}\mathbf{\text{PlantwideOverheadCostperunit}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{25}\mathbf{+}\frac{\mathbf{\$}\mathbf{699}\mathbf{,}\mathbf{972}}{\mathbf{15}\mathbf{,}\mathbf{200}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{71}\mathbf{.}\mathbf{05}\end{array}$

$\begin{array}{rcl}\mathbf{\text{TotalCostperunitforPopupTent}}& \mathbf{=}& \mathbf{\text{DirectMaterialLaborcostperunit}}\mathbf{+}\mathbf{\text{PlantwideOverheadcostperunit}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{32}\mathbf{+}\frac{\mathbf{\$}\mathbf{430}\mathbf{,}\mathbf{750}}{\mathbf{7}\mathbf{,}\mathbf{600}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{88}\mathbf{.}\mathbf{68}\end{array}$

Calculation of gross profit per unit

$\begin{array}{rcl}\mathbf{\text{GrosProfitperunitforPupTent}}& \mathbf{=}& \mathbf{\text{Marketpriceperunit}}\mathbf{-}\mathbf{\text{TotalCostperunit}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{65}\mathbf{-}\mathbf{\$}\mathbf{71}\mathbf{.}\mathbf{05}\\ & \mathbf{=}& \mathbf{\$}\mathbf{6}\mathbf{.}\mathbf{05}\end{array}$

$\begin{array}{rcl}\mathbf{\text{GrossProfitperunitforPop-upTent}}& \mathbf{=}& \mathbf{\text{Marketpriceperunit}}\mathbf{-}\mathbf{\text{TotalCostperunit}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{200}\mathbf{-}\mathbf{\$}\mathbf{88}\mathbf{.}\mathbf{68}\\ & \mathbf{=}& \mathbf{\$}\mathbf{11}\mathbf{.}\mathbf{32}\end{array}$

By looking at the data it can be concluded that product line 1 is a not profitable product and product line 2 is a profitable product. Loss arising from product line 1 can be recovered from product line 2.

Calculation of total cost per unit under ABC

Computation of total cost per unit for Pup Tent

$\begin{array}{rcl}\mathbf{\text{Patternalignmentcostperunit}}& \mathbf{=}& \frac{\mathbf{\text{Totalcost}}}{\mathbf{\text{TotalBatchses}}}\mathbf{\times }\frac{\mathbf{\text{TotalbatchesbyPuptent}}}{\mathbf{\text{Totalunitsproduced}}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{64}\mathbf{,}\mathbf{400}}{\mathbf{560}}\mathbf{\times }\frac{\mathbf{140}}{\mathbf{15}\mathbf{,}\mathbf{200}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{1}\mathbf{.}\mathbf{89}\end{array}$

$\begin{array}{rcl}\mathbf{\text{Cuttingcostperunit}}& \mathbf{=}& \frac{\mathbf{\text{Totalcost}}}{\mathbf{\text{Totalmachinehour}}}\mathbf{\times }\frac{\mathbf{\text{TotalmachinehourbyPuptent}}}{\mathbf{\text{Totalunitsproduced}}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{50}\mathbf{,}\mathbf{430}}{\mathbf{12}\mathbf{,}\mathbf{300}}\mathbf{\times }\frac{\mathbf{7}\mathbf{,}\mathbf{000}}{\mathbf{15}\mathbf{,}\mathbf{200}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{1}\mathbf{.}\mathbf{89}\end{array}$

$\begin{array}{rcl}\mathbf{\text{MovingProductcostperunit}}& \mathbf{=}& \frac{\mathbf{\text{Totalcost}}}{\mathbf{\text{Totalno.ofmoves}}}\mathbf{\times }\frac{\mathbf{\text{Totalno.ofmovesbyPuptent}}}{\mathbf{\text{Totalunitsproduced}}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{100}\mathbf{,}\mathbf{800}}{\mathbf{2}\mathbf{,}\mathbf{400}}\mathbf{\times }\frac{\mathbf{800}}{\mathbf{15}\mathbf{,}\mathbf{200}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{2}\mathbf{.}\mathbf{21}\end{array}$

$\begin{array}{rcl}\mathbf{\text{Sewingcostperunit}}& \mathbf{=}& \frac{\mathbf{\text{Totalcost}}}{\mathbf{\text{TotalDLhours}}}\mathbf{\times }\frac{\mathbf{\text{TotalDLhoursbyPuptent}}}{\mathbf{\text{Totalunitsproduced}}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{327}\mathbf{,}\mathbf{600}}{\mathbf{4}\mathbf{,}\mathbf{200}}\mathbf{\times }\frac{\mathbf{2}\mathbf{,}\mathbf{600}}{\mathbf{15}\mathbf{,}\mathbf{200}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{13}\mathbf{.}\mathbf{34}\end{array}$

$\begin{array}{rcl}\mathbf{\text{Inspectingcostperunit}}& \mathbf{=}& \frac{\mathbf{\text{Totalcost}}}{\mathbf{\text{Totalno.ofinspections}}}\mathbf{\times }\frac{\mathbf{\text{No.ofInspectionsbyPuptent}}}{\mathbf{\text{Totalunitsproduced}}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{24}\mathbf{,}\mathbf{000}}{\mathbf{600}}\mathbf{\times }\frac{\mathbf{240}}{\mathbf{15}\mathbf{,}\mathbf{200}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{0}\mathbf{.}\mathbf{63}\end{array}$

$\begin{array}{rcl}\mathbf{\text{Fodingcostperunit}}& \mathbf{=}& \frac{\mathbf{\text{Totalcost}}}{\mathbf{\text{Totalno.ofunits}}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{47}\mathbf{,}\mathbf{880}}{\mathbf{22}\mathbf{,}\mathbf{800}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{2}\mathbf{.}\mathbf{1}\end{array}$

$\begin{array}{rcl}\mathbf{\text{Designcostperunit}}& \mathbf{=}& \frac{\mathbf{\text{Totalcost}}}{\mathbf{\text{Totalmodificationorder}}}\mathbf{\times }\frac{\mathbf{\text{No.ofmodificationorderbyPup}}}{\mathbf{\text{Totalunitsproduced}}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{280}\mathbf{,}\mathbf{000}}{\mathbf{280}}\mathbf{\times }\frac{\mathbf{70}}{\mathbf{15}\mathbf{,}\mathbf{200}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{4}\mathbf{.}\mathbf{61}\end{array}$

$\begin{array}{rcl}\mathbf{\text{Providingcostperunit}}& \mathbf{=}& \frac{\mathbf{\text{Totalcost}}}{\mathbf{\text{Totalsquarefeet}}}\mathbf{\times }\frac{\mathbf{\text{No.ofsquareyardbyPuptent}}}{\mathbf{\text{Totalunitsproduced}}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{184}\mathbf{,}\mathbf{000}}{\mathbf{920}\mathbf{,}\mathbf{000}}\mathbf{\times }\frac{\mathbf{450}\mathbf{,}\mathbf{000}}{\mathbf{15}\mathbf{,}\mathbf{200}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{5}\mathbf{.}\mathbf{92}\end{array}$

$\begin{array}{rcl}\mathbf{\text{Materialhandlingcostperunit}}& \mathbf{=}& \frac{\mathbf{\text{Total}}}{\mathbf{\text{Totalsquareyard}}}\mathbf{\times }\frac{\mathbf{\text{No.ofsquareyardbyPuptent}}}{\mathbf{\text{Totalunitsproduced}}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{184}\mathbf{,}\mathbf{000}}{\mathbf{920}\mathbf{,}\mathbf{000}}\mathbf{\times }\frac{\mathbf{450}\mathbf{,}\mathbf{000}}{\mathbf{15}\mathbf{,}\mathbf{200}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{5}\mathbf{.}\mathbf{92}\end{array}$

$\begin{array}{rcl}\mathbf{\text{TotalcostperunitforPuptent}}& \mathbf{=}& \mathbf{\text{DirectMaterialandDirectLaborCost}}\mathbf{+}\mathbf{\text{TotalOverheadcostforpuptent}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{125}\mathbf{+}\left(\$1.06+\$1.89+\$2.21+\$13.34+\$0.63+\$2.1+\$4.61+\$1.69+\$5.92\right)\\ & \mathbf{=}& \mathbf{\$}\mathbf{58}\mathbf{.}\mathbf{45}\end{array}$

Computation of total cost per unit for Pop-up Tent

$\begin{array}{rcl}\mathbf{\text{Patternalignmentcostperunit}}& \mathbf{=}& \frac{\mathbf{\text{Totalcost}}}{\mathbf{\text{TotalBatches}}}\mathbf{\times }\frac{\mathbf{\text{TotalbatchesbyPop-uptent}}}{\mathbf{\text{Totalunitsproduced}}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{64}\mathbf{,}\mathbf{400}}{\mathbf{560}}\mathbf{\times }\frac{\mathbf{420}}{\mathbf{7}\mathbf{,}\mathbf{600}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{6}\mathbf{.}\mathbf{36}\end{array}$

$\begin{array}{rcl}\mathbf{\text{Cuttingcostperunit}}& \mathbf{=}& \frac{\mathbf{\text{Totalcost}}}{\mathbf{\text{Totalmachinehour}}}\mathbf{\times }\frac{\mathbf{\text{TotalmachinehourbyPop-uptent}}}{\mathbf{\text{Totalunitsproduced}}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{50}\mathbf{,}\mathbf{430}}{\mathbf{12}\mathbf{,}\mathbf{300}}\mathbf{\times }\frac{\mathbf{5}\mathbf{,}\mathbf{300}}{\mathbf{7}\mathbf{,}\mathbf{600}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{2}\mathbf{.}\mathbf{86}\end{array}$

role="math" localid="1654859103417" $\begin{array}{rcl}\mathbf{\text{MovingProductcostperunit}}& \mathbf{=}& \frac{\mathbf{\text{Totalcost}}}{\mathbf{\text{Totalno.ofmoves}}}\mathbf{\times }\frac{\mathbf{\text{TotalmachinehourbyPop-uptent}}}{\mathbf{\text{Toatlunitsproduced}}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{100}\mathbf{,}\mathbf{800}}{\mathbf{2}\mathbf{,}\mathbf{400}}\mathbf{\times }\frac{\mathbf{1}\mathbf{,}\mathbf{600}}{\mathbf{7}\mathbf{,}\mathbf{600}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{8}\mathbf{.}\mathbf{84}\end{array}$

$\begin{array}{rcl}\mathbf{\text{Sewingcostperunit}}& \mathbf{=}& \frac{\mathbf{\text{Totalcost}}}{\mathbf{\text{TotalDLhours}}}\mathbf{\times }\frac{\mathbf{\text{TotalDLhoursbyPop-uptent}}}{\mathbf{\text{Totalunitsproduced}}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{327}\mathbf{,}\mathbf{600}}{\mathbf{4}\mathbf{,}\mathbf{200}}\mathbf{\times }\frac{\mathbf{1}\mathbf{,}\mathbf{600}}{\mathbf{7}\mathbf{,}\mathbf{600}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{16}\mathbf{.}\mathbf{42}\end{array}$

$\begin{array}{rcl}\mathbf{\text{Inspectingcostperunit}}& \mathbf{=}& \frac{\mathbf{\text{Totalcost}}}{\mathbf{\text{Totalno.ofinspections}}}\mathbf{\times }\frac{\mathbf{\text{No.ofinspectionbyPop-uptent}}}{\mathbf{\text{Totalunitsproduced}}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{24}\mathbf{,}\mathbf{000}}{\mathbf{600}}\mathbf{\times }\frac{\mathbf{360}}{\mathbf{7}\mathbf{,}\mathbf{600}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{1}\mathbf{.}\mathbf{89}\end{array}$

$\begin{array}{rcl}\mathbf{\text{Foldingcostperunit}}& \mathbf{=}& \frac{\mathbf{\text{Totalcost}}}{\mathbf{\text{Totalno.ofunits}}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{47}\mathbf{,}\mathbf{880}}{\mathbf{22}\mathbf{,}\mathbf{800}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{2}\mathbf{.}\mathbf{1}\end{array}$

$\begin{array}{rcl}\mathbf{\text{Designcostperunit}}& \mathbf{=}& \frac{\mathbf{\text{Totalcost}}}{\mathbf{\text{Totalmodificationorder}}}\mathbf{\times }\frac{\mathbf{\text{No.ofmodificationorderbyPop-uptent}}}{\mathbf{\text{Totalunitsproduced}}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{280}\mathbf{,}\mathbf{000}}{\mathbf{280}}\mathbf{\times }\frac{\mathbf{210}}{\mathbf{7}\mathbf{,}\mathbf{600}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{27}\mathbf{.}\mathbf{63}\end{array}$

$\begin{array}{rcl}\mathbf{\text{Providingcostperunit}}& \mathbf{=}& \frac{\mathbf{\text{Totalcost}}}{\mathbf{\text{Totalsquarefeet}}}\mathbf{\times }\frac{\mathbf{\text{No.ofsquarefeetbyPop-uptent}}}{\mathbf{\text{Totalunitsproduced}}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{51}\mathbf{,}\mathbf{600}}{\mathbf{8}\mathbf{,}\mathbf{600}}\mathbf{\times }\frac{\mathbf{4}\mathbf{,}\mathbf{300}}{\mathbf{7}\mathbf{,}\mathbf{600}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{3}\mathbf{.}\mathbf{39}\end{array}$

$\begin{array}{rcl}\mathbf{\text{Materialhandlingcostperunit}}& \mathbf{=}& \frac{\mathbf{\text{Total}}}{\mathbf{\text{Totalsquareyard}}}\mathbf{\times }\frac{\mathbf{\text{No.ofsquareyardbyPop-uptent}}}{\mathbf{\text{Totalunitsproduced}}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{184}\mathbf{,}\mathbf{000}}{\mathbf{920}\mathbf{,}\mathbf{000}}\mathbf{\times }\frac{\mathbf{470}\mathbf{,}\mathbf{000}}{\mathbf{7}\mathbf{,}\mathbf{600}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{12}\mathbf{.}\mathbf{37}\end{array}$

$\begin{array}{rcl}\mathbf{\text{TotalCostperunitforPop-uptent}}& \mathbf{=}& \mathbf{\text{DirectmaterialsandDirectlaborcost}}\mathbf{+}\mathbf{\text{TotalOverheadCostforPop-uptent}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{32}\mathbf{+}\left(\$6.36+\$2.86+\$8.84+\$16.42+\$1.89+\$2.1+\$27.63+\$3.39+\$12.37\right)\\ & \mathbf{=}& \mathbf{\$}\mathbf{113}\mathbf{.}\mathbf{86}\end{array}$

Calculation of gross profit per unit under ABC

$\begin{array}{rcl}\mathbf{\text{GrossProfitperunitforPuptent}}& \mathbf{=}& \mathbf{\text{Marketpriceperunit}}\mathbf{-}\mathbf{\text{Totalcostperunit}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{65}\mathbf{-}\mathbf{\$}\mathbf{58}\mathbf{.}\mathbf{45}\\ & \mathbf{=}& \mathbf{\$}\mathbf{6}\mathbf{.}\mathbf{55}\end{array}$

$\begin{array}{rcl}\mathbf{\text{GrossprofitperunitforPop-uptent}}& \mathbf{=}& \mathbf{\text{Marketpriceperunit}}\mathbf{-}\mathbf{\text{Totalcostperunit}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{200}\mathbf{-}\mathbf{\$}\mathbf{113}\mathbf{.}\mathbf{86}\\ & \mathbf{=}& \mathbf{\$}\mathbf{86}\mathbf{.}\mathbf{14}\end{array}$

By looking at the data it can be concluded that both the product lines are profitable. Based on ABC method, the cost has been allocated accurately.

Pricing analysis

Computation of total cost per unit for Pup tent

$\begin{array}{rcl}\mathbf{\text{Department1costpercase}}& \mathbf{=}& \frac{\mathbf{\text{Totalcost}}}{\mathbf{\text{Totalmachinehour}}}\mathbf{\times }\frac{\mathbf{\text{TotalMachinehourbyPuptent}}}{\mathbf{\text{Totalunitsproduced}}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{215}\mathbf{,}\mathbf{630}}{\mathbf{12}\mathbf{,}\mathbf{300}}\mathbf{\times }\frac{\mathbf{7}\mathbf{,}\mathbf{000}}{\mathbf{15}\mathbf{,}\mathbf{200}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{8}\mathbf{.}\mathbf{07}\end{array}$

$\begin{array}{rcl}\mathbf{\text{Department2costpercase}}& \mathbf{=}& \frac{\mathbf{\text{Totalcost}}}{\mathbf{\text{TotalDLhours}}}\mathbf{\times }\frac{\mathbf{\text{DLhourbyPoptent}}}{\mathbf{\text{Totalunitsproduced}}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{399}\mathbf{,}\mathbf{480}}{\mathbf{4}\mathbf{,}\mathbf{200}}\mathbf{\times }\frac{\mathbf{2}\mathbf{,}\mathbf{600}}{\mathbf{15}\mathbf{,}\mathbf{200}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{16}\mathbf{.}\mathbf{27}\end{array}$

$\begin{array}{rcl}\mathbf{\text{Designcostperunit}}& \mathbf{=}& \frac{\mathbf{\text{Totalcost}}}{\mathbf{\text{Totalmodificationorder}}}\mathbf{\times }\frac{\mathbf{\text{No.ofmodificationorderbyPop-uptent}}}{\mathbf{\text{Totalunitsproduced}}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{280}\mathbf{,}\mathbf{000}}{\mathbf{280}}\mathbf{\times }\frac{\mathbf{210}}{\mathbf{15}\mathbf{,}\mathbf{200}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{4}\mathbf{.}\mathbf{61}\end{array}$

$\begin{array}{rcl}\mathbf{\text{ProvidingCostperunit}}& \mathbf{=}& \frac{\mathbf{\text{Totalcost}}}{\mathbf{\text{Totalsquarefeet}}}\mathbf{\times }\frac{\mathbf{\text{No.ofsquarefeetbyPuptent}}}{\mathbf{\text{Totalunitsproduced}}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{51}\mathbf{,}\mathbf{600}}{\mathbf{8}\mathbf{,}\mathbf{600}}\mathbf{\times }\frac{\mathbf{4}\mathbf{,}\mathbf{300}}{\mathbf{15}\mathbf{,}\mathbf{200}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{1}\mathbf{.}\mathbf{69}\end{array}$

$\begin{array}{rcl}\mathbf{\text{Materialhandlingcostperunit}}& \mathbf{=}& \frac{\mathbf{\text{Total}}}{\mathbf{\text{Totalsquareyard}}}\mathbf{\times }\frac{\mathbf{\text{No.ofsquareyardbyPop-uptent}}}{\mathbf{\text{Totalunitsproduced}}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{184}\mathbf{,}\mathbf{000}}{\mathbf{920}\mathbf{,}\mathbf{000}}\mathbf{\times }\frac{\mathbf{450}\mathbf{,}\mathbf{000}}{\mathbf{15}\mathbf{,}\mathbf{200}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{5}\mathbf{.}\mathbf{92}\end{array}$

$\begin{array}{rcl}\mathbf{\text{Totalcostperunit}}& \mathbf{=}& \mathbf{\text{DirectmaterialandDirectlaborcost}}\mathbf{+}\mathbf{\text{TotalOverheadCostforPuptent}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{25}\mathbf{+}\left(\$8.07+\$16.27+\$4.61+\$1.69+\$5.92\right)\\ & \mathbf{=}& \mathbf{\$}\mathbf{61}\mathbf{.}\mathbf{56}\end{array}$

Computation of total cost per unit for Pop-up tent

$\begin{array}{rcl}\mathbf{\text{Department1costpercase}}& \mathbf{=}& \frac{\mathbf{\text{Totalcost}}}{\mathbf{\text{Totalmachinehour}}}\mathbf{\times }\frac{\mathbf{\text{TotalMachinehourbyPuptent}}}{\mathbf{\text{Totalunitsproduced}}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{215}\mathbf{,}\mathbf{630}}{\mathbf{12}\mathbf{,}\mathbf{300}}\mathbf{\times }\frac{\mathbf{5}\mathbf{,}\mathbf{300}}{\mathbf{7}\mathbf{,}\mathbf{600}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{12}\mathbf{.}\mathbf{23}\end{array}$

$\begin{array}{rcl}\mathbf{\text{Department2costpercase}}& \mathbf{=}& \frac{\mathbf{\text{Totalcost}}}{\mathbf{\text{TotalDLhours}}}\mathbf{\times }\frac{\mathbf{\text{DLhourbyPoptent}}}{\mathbf{\text{Totalunitsproduced}}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{399}\mathbf{,}\mathbf{480}}{\mathbf{4}\mathbf{,}\mathbf{200}}\mathbf{\times }\frac{\mathbf{1}\mathbf{,}\mathbf{600}}{\mathbf{7}\mathbf{,}\mathbf{600}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{20}\mathbf{.}\mathbf{02}\end{array}$

$\begin{array}{rcl}\mathbf{\text{Designcostperunit}}& \mathbf{=}& \frac{\mathbf{\text{Totalcost}}}{\mathbf{\text{Totalmodificationorder}}}\mathbf{\times }\frac{\mathbf{\text{No.ofmodificationorderbyPop-uptent}}}{\mathbf{\text{Totalunitsproduced}}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{280}\mathbf{,}\mathbf{000}}{\mathbf{280}}\mathbf{\times }\frac{\mathbf{210}}{\mathbf{7}\mathbf{,}\mathbf{600}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{27}\mathbf{.}\mathbf{63}\end{array}$

$\begin{array}{rcl}\mathbf{\text{ProvidingCostperunit}}& \mathbf{=}& \frac{\mathbf{\text{Totalcost}}}{\mathbf{\text{Totalsquarefeet}}}\mathbf{\times }\frac{\mathbf{\text{No.ofsquarefeetbyPuptent}}}{\mathbf{\text{Totalunitsproduced}}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{51}\mathbf{,}\mathbf{600}}{\mathbf{8}\mathbf{,}\mathbf{600}}\mathbf{\times }\frac{\mathbf{4}\mathbf{,}\mathbf{300}}{\mathbf{7}\mathbf{,}\mathbf{600}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{12}\mathbf{.}\mathbf{37}\end{array}$

$\begin{array}{rcl}\mathbf{\text{Materialhandlingcostperunit}}& \mathbf{=}& \frac{\mathbf{\text{Total}}}{\mathbf{\text{Totalsquareyard}}}\mathbf{\times }\frac{\mathbf{\text{No.ofsquareyardbyPop-uptent}}}{\mathbf{\text{Totalunitsproduced}}}\\ & \mathbf{=}& \frac{\mathbf{\$}\mathbf{184}\mathbf{,}\mathbf{000}}{\mathbf{920}\mathbf{,}\mathbf{000}}\mathbf{\times }\frac{\mathbf{470}\mathbf{,}\mathbf{000}}{\mathbf{7}\mathbf{,}\mathbf{600}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{12}\mathbf{.}\mathbf{37}\end{array}$

$\begin{array}{rcl}\mathbf{\text{Totalcostperunit}}& \mathbf{=}& \mathbf{\text{DirectmaterialandDirectlaborcost}}\mathbf{+}\mathbf{\text{TotalOverheadCostforPuptent}}\\ & \mathbf{=}& \mathbf{\$}\mathbf{32}\mathbf{+}\mathbf{(}\mathbf{\$}\mathbf{12}\mathbf{.}\mathbf{23}\mathbf{+}\mathbf{\$}\mathbf{20}\mathbf{.}\mathbf{02}\mathbf{+}\mathbf{\$}\mathbf{27}\mathbf{.}\mathbf{63}\mathbf{+}\mathbf{\$}\mathbf{3}\mathbf{.}\mathbf{39}\mathbf{+}\mathbf{\$}\mathbf{12}\mathbf{.}\mathbf{37}\mathbf{)}\\ & \mathbf{=}& \mathbf{\$}\mathbf{107}\mathbf{.}\mathbf{64}\end{array}$

No, the pricing analysis would not improve if the company uses departmental rate as the cost per unit would increase in both the case.