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Jordan Sporting Goods Corporation makes two types of racquets, tennis and badminton. The company uses the same facility to make both products even though the processes are quite different. The company has recently converted its cost accounting system to activity-based costing. The following are the cost data that Jane Price, the cost accountant, prepared for the third quarter of 2018 (during which Jordan made 69,500 tennis racquets and 29,600 badminton racquets). Tennis Racquet (TR) $18.10 per unit 34.50 per unit Badminton Racquet (BR) $14.10 per unit 24.50 per unit Direct Cost Direct materials Direct labor Estimated Cost Amount of Cost Driver Category Unit level Cost Driver $ 930,000 312,000 157,500 Number of inspection hours Number of setups TR: 14,700 hours; BR: 15,300 hours Batch level TR: 79 setups; BR: 51 setups TR: 4; BR: 1 TR: 31,400 hours; BR: 32,600 hours Product level Number of TV commercials 576,000 $1,975,500 Facility level Number of machine hours Total Inspectors are paid according to the number of actual hours worked, which is determined by the number of racquets inspected. Engineers who set up equipment for both products are paid monthly salaries. TV commercial fees are paid at the beginning of the quarter. Facility-level cost includes depreciation of all production equipment. Required a. Compute the cost per unit for each product. b. If management wants to price badminton racquets 30 percent above cost, what price should the company set?

Jordan Sporting Goods Corporation makes two types of racquets, tennis and badminton. The company uses the same facility to make both products even though the processes are quite different. The company has recently converted its cost accounting system to activity-based costing. The following are the cost data that Jane Price, the cost accountant, prepared for the third quarter of 2018 (during which Jordan made 69,500 tennis racquets and 29,600 badminton racquets). Tennis Racquet (TR) $18.10 per unit 34.50 per unit Badminton Racquet (BR) $14.10 per unit 24.50 per unit Direct Cost Direct materials Direct labor Estimated Cost Amount of Cost Driver Category Unit level Cost Driver $ 930,000 312,000 157,500 Number of inspection hours Number of setups TR: 14,700 hours; BR: 15,300 hours Batch level TR: 79 setups; BR: 51 setups TR: 4; BR: 1 TR: 31,400 hours; BR: 32,600 hours Product level Number of TV commercials 576,000 $1,975,500 Facility level Number of machine hours Total Inspectors are paid according to the number of actual hours worked, which is determined by the number of racquets inspected. Engineers who set up equipment for both products are paid monthly salaries. TV commercial fees are paid at the beginning of the quarter. Facility-level cost includes depreciation of all production equipment. Required a. Compute the cost per unit for each product. b. If management wants to price badminton racquets 30 percent above cost, what price should the company set?

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints
Section: Chapter Questions
Problem 16E
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Jordan Sporting Goods Corporation makes two types of racquets, tennis and badminton. The company uses the same facility to make both products even though the processes are quite different. The company has recently converted its cost accounting system to activity-based costing. The following are the cost data that Jane Price, the cost accountant, prepared for the third quarter of 2018 (during which Jordan made 69,500 tennis racquets and 29,600 badminton racquets). Tennis Racquet (TR) $18.10 per unit 34.50 per unit Direct Cost Badminton Racquet (BR) Direct materials $14.10 per unit 24.50 per unit Direct labor Category Estimated Cost Cost Driver Amount of Cost Driver 930,000 312,000 Unit level Number of inspection hours Number of setups TR: 14,700 hours; BR: 15,300 hours TR: 79 setups; BR: 51 setups Batch level Product level 157,500 Number of TV commercials TR: 4; BR: 1 Facility level 576,000 Number of machine hours TR: 31,400 hours; BR: 32,600 hours $1,975,500 Total Inspectors are paid according to the number of actual hours worked, which is determined by the number of racquets inspected. Engineers who set up equipment for both products are paid monthly salaries. TV commercial fees are paid at the beginning of the quarter. Facility-level cost includes depreciation of all production equipment. Required a. Compute the cost per unit for each product. b. If management wants to price badminton racquets 30 percent above cost, what price should the company set? Complete this question by entering your answers in the tabs below. Required A Required B Compute the cost per unit for each product. (Round intermediate calculations and final answers to 2 decimal places.) Type of Product Cost per Unit Tennis Racquet Badminton Racquet Required A Required B >
Transcribed Image Text:Jordan Sporting Goods Corporation makes two types of racquets, tennis and badminton. The company uses the same facility to make both products even though the processes are quite different. The company has recently converted its cost accounting system to activity-based costing. The following are the cost data that Jane Price, the cost accountant, prepared for the third quarter of 2018 (during which Jordan made 69,500 tennis racquets and 29,600 badminton racquets). Tennis Racquet (TR) $18.10 per unit 34.50 per unit Direct Cost Badminton Racquet (BR) Direct materials $14.10 per unit 24.50 per unit Direct labor Category Estimated Cost Cost Driver Amount of Cost Driver 930,000 312,000 Unit level Number of inspection hours Number of setups TR: 14,700 hours; BR: 15,300 hours TR: 79 setups; BR: 51 setups Batch level Product level 157,500 Number of TV commercials TR: 4; BR: 1 Facility level 576,000 Number of machine hours TR: 31,400 hours; BR: 32,600 hours $1,975,500 Total Inspectors are paid according to the number of actual hours worked, which is determined by the number of racquets inspected. Engineers who set up equipment for both products are paid monthly salaries. TV commercial fees are paid at the beginning of the quarter. Facility-level cost includes depreciation of all production equipment. Required a. Compute the cost per unit for each product. b. If management wants to price badminton racquets 30 percent above cost, what price should the company set? Complete this question by entering your answers in the tabs below. Required A Required B Compute the cost per unit for each product. (Round intermediate calculations and final answers to 2 decimal places.) Type of Product Cost per Unit Tennis Racquet Badminton Racquet Required A Required B >
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