5-2. COMPUTATION OF CAPACITY The Patience Corporation operates six days a week (Monday - Saturday) on a two-eight hour shifts. The plant which can complete ten (10) units per hour is closed twelve working days each year for holidays, machines are repaired, oiled and cleaned for about 616 hours during the period. Normal sales demand for its products averages 40,000 units a year over a five-year period. The expected sales volume for the year is 35,000 units. The fixed costs amount to P210,000 per year. REQUIRED: 1. Determine the base capacity (in labor hours) for each of the following: (a) maximum capacity: (b) practical capacity: (c) normal capacity: (d) expected actual capacity. 2. Compute the fixed costs per hour under each of the four capacities 3. Compute the idle capacity costs under each of the four capacities if the plant operates at 3,400 hours.
5-2. COMPUTATION OF CAPACITY The Patience Corporation operates six days a week (Monday - Saturday) on a two-eight hour shifts. The plant which can complete ten (10) units per hour is closed twelve working days each year for holidays, machines are repaired, oiled and cleaned for about 616 hours during the period. Normal sales demand for its products averages 40,000 units a year over a five-year period. The expected sales volume for the year is 35,000 units. The fixed costs amount to P210,000 per year. REQUIRED: 1. Determine the base capacity (in labor hours) for each of the following: (a) maximum capacity: (b) practical capacity: (c) normal capacity: (d) expected actual capacity. 2. Compute the fixed costs per hour under each of the four capacities 3. Compute the idle capacity costs under each of the four capacities if the plant operates at 3,400 hours.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter5: Activity-based Costing And Management
Section: Chapter Questions
Problem 47E: Cycle Time and Velocity In the first quarter of operations, a manufacturing cell produced 80,000...
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Exercise 5-2. COMPUTATION OF CAPACITY
The Patience Corporation operates six days a week (Monday - Saturday) on a two-eight hour shifts. The plant which can complete ten (10) units per hour is closed twelve working days each year for holidays, machines are repaired, oiled and cleaned for about 616 hours during the period. Normal sales demand for its products averages 40,000 units a year over a five-year period. The expected sales volume for the year is 35,000 units. The fixed costs amount to P210,000 per year. REQUIRED:
1. Determine the base capacity (in labor hours) for each of the following: (a) maximum
capacity: (b) practical capacity: (c) normal capacity: (d) expected actual capacity.
2. Compute the fixed costs per hour under each of the four capacities
3. Compute the idle capacity costs under each of the four capacities if the plant operates at 3,400 hours.
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