Fanning 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 the year (during which Fanning made 69.000 tennis racquets and 30,400 badminton racquets). Direct Cost Direct materials Direct labor Category Estimated Cost Unit level $ 638,000 374,100 Product level 157,500 Facility 594,000 level Total Batch level Required A Tennis Racquet (TR) $ 15.10 per unit 32.50 per unit Required B $ Type of Product 1,763,600 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? Tennis racquet Badminton racquet Badminton Racquet (BR) $ 13.20 per unit 26.70 per unit Cost Driver Number of inspection hours Number of setups Number of TV commercials Number of machine hours Complete this question by entering your answers in the tabs below. Amount of Cost Driver TR: 15,700 hours; BR: 6,300 hours TR: 83 setups; BR: 46 setups TR: 4; BR: 1 TR: 31,200 hours; BR: 34,800 hours Compute the cost per unit for each product. (Round intermediate calculations and final answers to 2 decimal places.) Cost per Unit equited A Required B >
Fanning 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 the year (during which Fanning made 69.000 tennis racquets and 30,400 badminton racquets). Direct Cost Direct materials Direct labor Category Estimated Cost Unit level $ 638,000 374,100 Product level 157,500 Facility 594,000 level Total Batch level Required A Tennis Racquet (TR) $ 15.10 per unit 32.50 per unit Required B $ Type of Product 1,763,600 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? Tennis racquet Badminton racquet Badminton Racquet (BR) $ 13.20 per unit 26.70 per unit Cost Driver Number of inspection hours Number of setups Number of TV commercials Number of machine hours Complete this question by entering your answers in the tabs below. Amount of Cost Driver TR: 15,700 hours; BR: 6,300 hours TR: 83 setups; BR: 46 setups TR: 4; BR: 1 TR: 31,200 hours; BR: 34,800 hours Compute the cost per unit for each product. (Round intermediate calculations and final answers to 2 decimal places.) Cost per Unit equited A Required B >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:Fanning 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 the year (during which Fanning made 69,000 tennis
racquets and 30,400 badminton racquets).
Direct Cost
Direct materials.
Direct labor
Category
Estimated Cost
Unit level $ 638,000
Batch level
374,100
157,500
594,000
Product level
Facility
level
Total
Tennis Racquet
(TR)
$ 15.10 per unit
32.50 per unit
Required A Required B
$
Type of Product
Tennis racquet
Badminton racquet
Badminton
Racquet (BR)
$ 13.20 per unit
26.70 per unit
Cost Driver
Amount of Cost Driver
Number of inspection TR: 15,700 hours; BR:
hours.
6,300 hours
TR: 83 setups; BR: 46
setups
TR: 4; BR: 1
1,763,600
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?
Number of setups
Number of TV
commercials
Number of machine
hours
Complete this question by entering your answers in the tabs below.
TR: 31,200 hours; BR:
34,800 hours
Compute the cost per unit for each product. (Round intermediate calculations and final
answers to 2 decimal places.)
Cost per Unit
< Required A
Required B >
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