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Per Total Unit $ 4.65 Direct materials Direct labour 4.05 Supervision Depreciation Variable manufacturing overhead 2.25 $90,000 60,000 1.50 0.90 Rent 0.45 18,000 Total production cost $13.80 A supervisor would have to be hired to oversee production of the starters. However, the company has sufficient idle tools and machinery that no new equipment would have to be purchased. The rent charge above is based on space utilized in the plant. The total rent on the plant is $148,000 per period. Depreciation is due to obsolescence, rather than wear and tear. Required: Prepare computations to show the dollar advantage or disadvantage per period of making the starters. (Do not round intermediate calculations.) Dollar advantage Dollar disadvantage

Per Total Unit $ 4.65 Direct materials Direct labour 4.05 Supervision Depreciation Variable manufacturing overhead 2.25 $90,000 60,000 1.50 0.90 Rent 0.45 18,000 Total production cost $13.80 A supervisor would have to be hired to oversee production of the starters. However, the company has sufficient idle tools and machinery that no new equipment would have to be purchased. The rent charge above is based on space utilized in the plant. The total rent on the plant is $148,000 per period. Depreciation is due to obsolescence, rather than wear and tear. Required: Prepare computations to show the dollar advantage or disadvantage per period of making the starters. (Do not round intermediate calculations.) Dollar advantage Dollar disadvantage

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Per Total Unit Direct materials $ 4.65 Direct labour 4.05 Supervision Depreciation Variable manufacturing overhead 2.25 $90,000 1.50 60,000 0.90 Rent 0.45 18,000 Total production cost $13.80 A supervisor would have to be hired to oversee production of the starters. However, the company has sufficient idle tools and machinery that no new equipment would have to be purchased. The rent charge above is based on space utilized in the plant. The total rent on the plant is $148,000 per period. Depreciation is due to obsolescence, rather than wear and tear. Required: Prepare computations to show the dollar advantage or disadvantage per period of making the starters. (Do not round intermediate calculations.) Dollar advantage Dollar disadvantage
Transcribed Image Text:Per Total Unit Direct materials $ 4.65 Direct labour 4.05 Supervision Depreciation Variable manufacturing overhead 2.25 $90,000 1.50 60,000 0.90 Rent 0.45 18,000 Total production cost $13.80 A supervisor would have to be hired to oversee production of the starters. However, the company has sufficient idle tools and machinery that no new equipment would have to be purchased. The rent charge above is based on space utilized in the plant. The total rent on the plant is $148,000 per period. Depreciation is due to obsolescence, rather than wear and tear. Required: Prepare computations to show the dollar advantage or disadvantage per period of making the starters. (Do not round intermediate calculations.) Dollar advantage Dollar disadvantage
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