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Walton Chairs, Incorporated makes two types of chairs. Model Diamond is a high-end product designed for professional offices. Model Gold is an economical product designed for family use. Jane Silva, the president, is worried about cut-throat price competition in the chairs market. Her company suffered a loss last quarter, an unprecedented event in its history. The company's accountant prepared the following cost data for Ms. Silva: Direct Cost per Unit Direct materials. Direct labor Category Unit level Batch level Product level Facility level Total Model Diamond (D) $20.60 per unit $18.80/hour x 2.00 hours production time Type of Product Estimated Cost $ 249,600 1,036,000 612, 000 870,000 $ 2,767,600 a. Model Diamond a. Model Gold b. Model Diamond b. Model Gold Cost Driver Number of units Number of setups Number of TV commercials Number of machine hours The market price for office chairs comparable to Model Diamond is $119 and to Model Gold is $73. Cost per Unit Model Gold (G) $10.80 per unit $18.80/hour x 1.00 hour production time Required a. Compute the cost per unit for both products. b. Dan Barker, the chief engineer, told Ms. Silva that the company is currently making 132 units of Model Diamond per batch and 199 units of Model Gold per batch. He suggests doubling the batch sizes to cut the number of setups in half, thereby reducing the setup cost by 50 percent. Compute the cost per unit for each product if Ms. Silva adopts his suggestion. (For all requirements, round intermediate calculations and final answers to 2 decimal places.) Use of Cost Driver D: 15,000 units; G: 33,000 units D: 114 setups; G: 166 setups D: 5; G: 12 D: 2,500 hours; G: 3,300 hours

Walton Chairs, Incorporated makes two types of chairs. Model Diamond is a high-end product designed for professional offices. Model Gold is an economical product designed for family use. Jane Silva, the president, is worried about cut-throat price competition in the chairs market. Her company suffered a loss last quarter, an unprecedented event in its history. The company's accountant prepared the following cost data for Ms. Silva: Direct Cost per Unit Direct materials. Direct labor Category Unit level Batch level Product level Facility level Total Model Diamond (D) $20.60 per unit $18.80/hour x 2.00 hours production time Type of Product Estimated Cost $ 249,600 1,036,000 612, 000 870,000 $ 2,767,600 a. Model Diamond a. Model Gold b. Model Diamond b. Model Gold Cost Driver Number of units Number of setups Number of TV commercials Number of machine hours The market price for office chairs comparable to Model Diamond is $119 and to Model Gold is $73. Cost per Unit Model Gold (G) $10.80 per unit $18.80/hour x 1.00 hour production time Required a. Compute the cost per unit for both products. b. Dan Barker, the chief engineer, told Ms. Silva that the company is currently making 132 units of Model Diamond per batch and 199 units of Model Gold per batch. He suggests doubling the batch sizes to cut the number of setups in half, thereby reducing the setup cost by 50 percent. Compute the cost per unit for each product if Ms. Silva adopts his suggestion. (For all requirements, round intermediate calculations and final answers to 2 decimal places.) Use of Cost Driver D: 15,000 units; G: 33,000 units D: 114 setups; G: 166 setups D: 5; G: 12 D: 2,500 hours; G: 3,300 hours

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter5: Support Department And Joint Cost Allocation
Section: Chapter Questions
Problem 1MAD: Analyze Milkrageous, Inc. Milkragcous, Inc., a large, private dairy products company, is determining...
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apter Review i Walton Chairs, Incorporated makes two types of chairs. Model Diamond is a high-end product designed for professional offices. Model Gold is an economical product designed for family use. Jane Silva, the president, is worried about cut-throat price competition in the chairs market. Her company suffered a loss last quarter, an unprecedented event in its history. The company's accountant prepared the following cost data for Ms. Silva: Direct Cost per Unit Direct materials. Direct labor Category Unit level Batch level Product level Facility level Total Model Diamond (D) $20.60 per unit $18.80/hour x 2.00 hours production time. Type of Product Estimated Cost $249,600 1,036, 000 612,000 870,000 $ 2,767,600 a. Model Diamond a. Model Gold b. Model Diamond b. Model Gold Cost Driver Number of units Number of setups Number of TV commercials Number of machine hours The market price for office chairs comparable to Model Diamond is $119 and to Model Gold is $73. Cost per Unit aved Model Gold (G) $10.80 per unit $18.80/hour x 1.00 hour production time Required a. Compute the cost per unit for both products. b. Dan Barker, the chief engineer, told Ms. Silva that the company is currently making 132 units of Model Diamond per batch and 199 units of Model Gold per batch. He suggests doubling the batch sizes to cut the number of setups in half, thereby reducing the setup cost by 50 percent. Compute the cost per unit for each product if Ms. Silva adopts his suggestion. (For all requirements, round intermediate calculations and final answers to 2 decimal places.) Use of Cost Driver D: 15,000 units; G: 33,000 units D: 114 setups; G: 166 setups D: 5; G: 12 D: 2,500 hours; G: 3,300 hours < Prev 5 of 5 Next >
Transcribed Image Text:apter Review i Walton Chairs, Incorporated makes two types of chairs. Model Diamond is a high-end product designed for professional offices. Model Gold is an economical product designed for family use. Jane Silva, the president, is worried about cut-throat price competition in the chairs market. Her company suffered a loss last quarter, an unprecedented event in its history. The company's accountant prepared the following cost data for Ms. Silva: Direct Cost per Unit Direct materials. Direct labor Category Unit level Batch level Product level Facility level Total Model Diamond (D) $20.60 per unit $18.80/hour x 2.00 hours production time. Type of Product Estimated Cost $249,600 1,036, 000 612,000 870,000 $ 2,767,600 a. Model Diamond a. Model Gold b. Model Diamond b. Model Gold Cost Driver Number of units Number of setups Number of TV commercials Number of machine hours The market price for office chairs comparable to Model Diamond is $119 and to Model Gold is $73. Cost per Unit aved Model Gold (G) $10.80 per unit $18.80/hour x 1.00 hour production time Required a. Compute the cost per unit for both products. b. Dan Barker, the chief engineer, told Ms. Silva that the company is currently making 132 units of Model Diamond per batch and 199 units of Model Gold per batch. He suggests doubling the batch sizes to cut the number of setups in half, thereby reducing the setup cost by 50 percent. Compute the cost per unit for each product if Ms. Silva adopts his suggestion. (For all requirements, round intermediate calculations and final answers to 2 decimal places.) Use of Cost Driver D: 15,000 units; G: 33,000 units D: 114 setups; G: 166 setups D: 5; G: 12 D: 2,500 hours; G: 3,300 hours < Prev 5 of 5 Next >
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