Mimi's Fixtures manufactures kitchen tiles in one plant, which has a practical capacity of 30,000 tiles. The variable cost of the tile is $18.00 per unit, and the fixed costs of the plant are $600,000 annually. Current annual demand is 25,000 tiles. Mimi bought the current plant because she expected that demand for the tiles would grow once her reputation was established. Required: a. What cost per tile should the cost system report? b. What is the cost of excess capacity? c. How would your answers to requirements (a) and (b) change if the smallest tile manufacturing plant that one could build (owing to technology) was able to produce 30,000 tiles? Complete this question by entering your answers in the tabs below. Required A Required B Required C What cost per tile should the cost system report? Cost per tile Required A Required B >
Mimi's Fixtures manufactures kitchen tiles in one plant, which has a practical capacity of 30,000 tiles. The variable cost of the tile is $18.00 per unit, and the fixed costs of the plant are $600,000 annually. Current annual demand is 25,000 tiles. Mimi bought the current plant because she expected that demand for the tiles would grow once her reputation was established. Required: a. What cost per tile should the cost system report? b. What is the cost of excess capacity? c. How would your answers to requirements (a) and (b) change if the smallest tile manufacturing plant that one could build (owing to technology) was able to produce 30,000 tiles? Complete this question by entering your answers in the tabs below. Required A Required B Required C What cost per tile should the cost system report? Cost per tile Required A Required B >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Step 1 Introduction
VIEWStep 2 a) Statement showing cost per tile as per cost system report
VIEWStep 3 a. Answer
VIEWStep 4 b) Statement showing the cost of excess capacity
VIEWStep 5 b. Answer
VIEWStep 6 c).1 Statement showing cost per tile when capacity is changed now 30,000 tiles
VIEWStep 7 C.1 Answer
VIEWStep 8 C.) 2. Statement showing the cost of excess capacity when capacity is to be changed
VIEWStep 9 C.) 2 Answer
VIEWStep 10 Working note
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