EXERCISE 8-21 (CONTINUED)

100,000 DLHs

b. The margins for the windows ordered by the two customers are computed as follows under the

traditional costing system:

Kuszik Builders Western Homes

Sales... $12,500 $68,000

Costs:

Direct materials... $4,200 $18,500

Direct labor... 5,400 36,000

Manufacturing overhead (@ $7.80 per DLH).... 2,340 11,940 15,600 70,100

Margin ... $ 560 ($ 2,100)

Case 8-33 (continued)