Kaizen improvements environmental costs. US Apparel (USA) manufactures plain white and solid-colored T-shirts. Budgeted inputs include the following: Price Quantity Cost per unit of output 0.75 yard per unit $8 per yard $16 per DMLH $0.50 per ounce $6 per unit $4 per unit $2 per unit Fabric Labor 0.25 DMLH per unit 4 ounces per unit Dye* *For colored T-shirts only Budgeted sales and selling price per unit are as follows: Selling Price per Unit $12 per T-shirt $15 per T-shirt Budgeted Sales White T-shirts 10,000 units Colored T-shirts 50,000 units USA has the opportunity to switch from using the dye it currently uses to using an environmentally friendly dye that costs $1.25 per ounce. The company would still need 4 ounces of dye per shirt. USA is re- luctant to change because of the increase in costs (and decrease in profit), but the Environmental Protection Agency has threatened to fine the company $130,000 if it continues to use the harmful but less expensive dye.

Kaizen improvements environmental costs. US Apparel (USA) manufactures plain white and solid-colored T-shirts. Budgeted inputs include the following: Price Quantity Cost per unit of output 0.75 yard per unit $8 per yard $16 per DMLH $0.50 per ounce $6 per unit $4 per unit $2 per unit Fabric Labor 0.25 DMLH per unit 4 ounces per unit Dye* *For colored T-shirts only Budgeted sales and selling price per unit are as follows: Selling Price per Unit $12 per T-shirt $15 per T-shirt Budgeted Sales White T-shirts 10,000 units Colored T-shirts 50,000 units USA has the opportunity to switch from using the dye it currently uses to using an environmentally friendly dye that costs $1.25 per ounce. The company would still need 4 ounces of dye per shirt. USA is re- luctant to change because of the increase in costs (and decrease in profit), but the Environmental Protection Agency has threatened to fine the company $130,000 if it continues to use the harmful but less expensive dye.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter8: Budgeting For Planning And Control

Section: Chapter Questions

Problem 13CE: Nashler Company has the following budgeted variable costs per unit produced: Budgeted fixed overhead...

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