Extracted text: 6) Using activity-based costing method, how much is the cost driver rates for shipping? 7) Using activity-based costing method, how much is the overhead allocated to M3100? 8) Using activity-based costing method, how much is the overhead allocated to M6100? 9) Using activity-based costing method, how much is the gross profit?
Extracted text: MTI makes three types of lawn tractors: M3100, M4100, and M6100. In the past, it allocated overhead to products using machine-hours. Last year, the company produced 10,000 units of M3100, 17,500 units of M4100, and 10,000 units of M6100 and had the following revenues and costs: MTI Income Statement M3100 M4 100 M6100 Total Sales revenue. Direct costs Direct materials .. Direct labor $9,000,000 $15,000,000 $13,500,000 $37,500,000 3,000,000 600,000 4,500,000 900,000 3,300,000 10,800,000 1,800,000 3,300,000 Variable overhead Setting up machines. Processing sales orders... Warehousing ..... Operating machines Shipping .. Contribution margin. Plant administration 2,400,000 1,800,000 2,400,000 1,200,000 900,000 $14,700,000 Gross profit..... 6,000,000 $ 8,700,000 MTI's controller has heard about activity-based costing and puts together an employee team to recommend cost allocation bases. The employee team recommends the following: Activity Cost Driver M3100 M4100 M6100 Setting up machines.... Production runs Processing sales orders Warehousing... Operating machines Shipping.. 10 20 20 Sales orders received Units held in inventory Machine-hours 180 400 220 100 200 100 6,000 10,000 17,500 10,000 9,000 10,000 Units shipped The employee team recommends that plant administration costs not be allocated to products.