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    Unitron - Teuku Aldefa

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    Teuku Aldefa
    Unitron Corporation produces 5 products (401-405) to meet annual sales orders. It uses an average costing system with a cost of $0.50 per unit. It also uses a relative sales value approach to allocate joint costs, assigning different costs to each product based on order volume, sales price, and market share. The document discusses scenarios of additional orders for product 401 and 404, analyzing the effect on costs, profits, and which costing method to use under different circumstances. It recommends the relative sales value approach provides more precise cost allocation.

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    Unitron - Teuku Aldefa

    Uploaded by

    Teuku Aldefa
    48 views2 pages
    Unitron Corporation produces 5 products (401-405) to meet annual sales orders. It uses an average costing system with a cost of $0.50 per unit. It also uses a relative sales value approach to allocate joint costs, assigning different costs to each product based on order volume, sales price, and market share. The document discusses scenarios of additional orders for product 401 and 404, analyzing the effect on costs, profits, and which costing method to use under different circumstances. It recommends the relative sales value approach provides more precise cost allocation.

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    Unitron Corporation produces 5 products (401-405) to meet annual sales orders. It uses an average costing system with a cost of $0.50 per unit. It also uses a relative sales value approach to allocate joint costs, assigning different costs to each product based on order volume, sales price, and market share. The document discusses scenarios of additional orders for product 401 and 404, analyzing the effect on costs, profits, and which costing method to use under different circumstances. It recommends the relative sales value approach provides more precise cost allocation.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    48 views2 pages

    Unitron - Teuku Aldefa

    Uploaded by

    Teuku Aldefa
    Unitron Corporation produces 5 products (401-405) to meet annual sales orders. It uses an average costing system with a cost of $0.50 per unit. It also uses a relative sales value approach to allocate joint costs, assigning different costs to each product based on order volume, sales price, and market share. The document discusses scenarios of additional orders for product 401 and 404, analyzing the effect on costs, profits, and which costing method to use under different circumstances. It recommends the relative sales value approach provides more precise cost allocation.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    Unitron Corporation

    1 Produced As/Sold As

    Annual Sales Order (Units) Product Annual Production


    100,000.00 401 90,000.00
    402 10,000.00
    140,000.00 402 110,000.00
    403 30,000.00
    100,000.00 403 60,000.00
    404 40,000.00
    40,000.00 404 20,000.00
    405 20,000.00
    20,000.00 405 20,000.00
    Total 400,000.00 Equal 400,000.00

    2 Average Costing System


    Total Manufacturing Cost / Output Produced 0.50
    (200.000/400.000)
    Product Cost / Unit
    401 0.50
    402 0.50
    403 0.50
    404 0.50
    405 0.50

    Sales Value System


    Product Unit Ordered Sales Price / Unit Percent of Market Value Percent Sales Value Allocated Join Cost
    401 100,000.00 0.40 40,000.00 16% 32,520
    402 140,000.00 0.60 84,000.00 34% 68,293
    403 100,000.00 0.70 70,000.00 28% 56,911
    404 40,000.00 0.80 32,000.00 13% 26,016
    405 20,000.00 1.00 20,000.00 8% 16,260

    Total 400,000.00 246,000.00 100.00% 200,000.00

    Product Allocated Join Cost Unit Produced Cost / Unit


    401 32,520 90,000.00 0.36
    402 68,293 120,000.00 0.57
    403 56,911 90,000.00 0.63
    404 26,016 60,000.00 0.43
    405 16,260 40,000.00 0.41
    200,000.00 400,000.00

    3 What if 6000 ordered for product 401


    A.
    Revenue 6000 x 0.40 $2,400.00

    Physical Unit
    Because there is still beginning inventory, It should be counted
    Beginning Inventory 3,000.00
    Cost / Unit 0.50
    $1,500.00
    Unit Sales 3,000.00
    Cost / Unit 0.36
    $1,080.00
    Total Cost $2,580.00

    Profit (Loss) ($ (180.00)

    Sales Value

    Total Cost 6000 x 0.36 $2,160.00


    Profit (Loss) ($ 240.00)

    B
    Helen should took the Sales Value Split-Off Method.
    The simplest reason why helen choose this method, because it make a proft for the company
    The sales value method gives $240 in profit, meanwhile with the physical unit gives $180 in loss.

    4 Maybe, Helen might be considered to accept the offer from the toys company.
    In the information said that Unitron offered a "seconds" at a price $25. definitely,
    offering from the toys company below the standard price stated by Unitron.
    But, there is no doubt to try accept the offer. Moreover, this item is a slow moving in a past year.

    5 Considering from the number 3, Unitron should imply the relative sales value approach.
    Using this approach, Unitron can identified cost/unit more precisely. So they know how
    much it cost allocation out per product.

    6 A government purchasing agent inquirred 404 for 100.000


    They stated that 10% profit margin would probably allowable.

    If Unitron use 2 of approaches (Physical and Relative Sales)

    Cost / Unit Cost / Unit (Exhibit 4) Profit Margin


    Physical Unit 0.50 0.80 0.30
    Relative Sales 0.43 0.80 0.37

    Inquirred 10 percent of profit margin

    Profit Margin Cost / Unit after margin Profit Margin after include 10% Different profit Margin Percentage of Changes
    Physical Unit 10% 0.55 0.05 ($ (0.25) -83.33%
    Relative Sales 10% 0.47 0.04 ($ (0.33) -88.38%

    According to the table shown above, I think they should not to accept the offer from the government. Because the decreased profit is significant.
    But, it goes back to the management's decision.

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