Your company has received an order for 20 units of aproduct. Th e labor cost to produce the item is $9.50 per hour. Th esetup cost for the item is $60 and material costs are $25 per unit. Th e item is sold for $92. Th e learning rate is 80 percent. Overheadis assessed at a rate of 55 percent of unit labor cost.(a) Determine the average unit cost for the 20 units if the fi rstunit takes four hours.(b) Determine the minimum number of units that need to bemade before the selling price meets or exceeds the averageunit cost.
Your company has received an order for 20 units of aproduct. Th e labor cost to produce the item is $9.50 per hour. Th esetup cost for the item is $60 and material costs are $25 per unit. Th e item is sold for $92. Th e learning rate is 80 percent. Overheadis assessed at a rate of 55 percent of unit labor cost.(a) Determine the average unit cost for the 20 units if the fi rstunit takes four hours.(b) Determine the minimum number of units that need to bemade before the selling price meets or exceeds the averageunit cost.
Chapter6: Activity-based, Variable, And Absorption Costing
Section: Chapter Questions
Problem 6PA: Box Springs, Inc., makes two sizes of box springs: twin and double. The direct material for the twin...
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Your company has received an order for 20 units of a
product. Th e labor cost to produce the item is $9.50 per hour. Th e
setup cost for the item is $60 and material costs are $25 per unit. Th e item is sold for $92. Th e learning rate is 80 percent. Overhead
is assessed at a rate of 55 percent of unit labor cost.
(a) Determine the average unit cost for the 20 units if the fi rst
unit takes four hours.
(b) Determine the minimum number of units that need to be
made before the selling price meets or exceeds the average
unit cost.
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