ONE At Stardust Gems, a faux gem and jewelry company, the setting department is a bottleneck. The company is considering hiring an extra worker, whose salary will be $67,000 per year, to ease the problem. Using the extra worker, the company will be able to produce and sell 9,000 more units per year. The selling price per unit is $20. The cost per unit currently is $15.85 as shown: Direct material Direct labor Variable overhead Fixed overhead (primarily depreciation of equipment) Total Required: $5.50 3.10 2.45 4.80 $15.85 1. What is the annual financial impact of hiring the extra worker for the bottleneck process? Show your calculations, and explain as needed. 2. What additional factors should Stardust consider before making the decision to hire the extra worker?
ONE At Stardust Gems, a faux gem and jewelry company, the setting department is a bottleneck. The company is considering hiring an extra worker, whose salary will be $67,000 per year, to ease the problem. Using the extra worker, the company will be able to produce and sell 9,000 more units per year. The selling price per unit is $20. The cost per unit currently is $15.85 as shown: Direct material Direct labor Variable overhead Fixed overhead (primarily depreciation of equipment) Total Required: $5.50 3.10 2.45 4.80 $15.85 1. What is the annual financial impact of hiring the extra worker for the bottleneck process? Show your calculations, and explain as needed. 2. What additional factors should Stardust consider before making the decision to hire the extra worker?
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 16PB: At Stardust Gems, a faux gem and jewelry company, the setting department is a bottleneck. The...
Related questions
Question
What additional factors should Stardust consider before making the decision to hire the extra worker?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College