M & S Company manufactures two types of storage cabinets – Type A and Type B.
Key data are as follows:
Currently, the company applies overhead to all units at the rate of $8 per machine hour.
Data on the number of machine hours, number of setups and outgoing shipments are as follows:
The firm’s total overhead of $400,000 is subdivided as follows:
Manufacturing setups $80,000
Machine processing $100,000
Product shipping $220,000
a) Determine the unit manufacturing cost of Type A and Type B storage cabinets by using the company’s current overhead costing system.
b) Determine the unit manufacturing cost of Type A and Type B storage cabinets by using activity-based costing system.
c) Is the cost of the Type A storage cabinet overstated or understated under the current method? If so, by how much?
Identify any ethical dilemma you have faced in the course of your previous/ current work. Alternatively, you may use any local ethical dilemma case published in the newspapers in the last six months.
In less than 1,000 words, explain how you have successfully managed to resolve the ethical dilemma using a suitable framework/ model.