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RATE Corp. is capable of turning out 15 completed units every 30 seconds. The plant normally operates five days a week on a two eight-hour shift. Each year, the factory is closed 12 working days for holidays. Machinery is idle 750 hours for cleaning, oiling and maintenance. Normal sales averages 110,000 units a year over a five-year period. The expected sales volume for the year is 112,500 units. The fixed cost of operating the plant amounted to 385,000 per year.  1. Compute the Fixed Unit Costs under Practical Capacity? 2. Compute the idle Capacity Cost under n

RATE Corp. is capable of turning out 15 completed units every 30 seconds. The plant normally operates five days a week on a two eight-hour shift. Each year, the factory is closed 12 working days for holidays. Machinery is idle 750 hours for cleaning, oiling and maintenance. Normal sales averages 110,000 units a year over a five-year period. The expected sales volume for the year is 112,500 units. The fixed cost of operating the plant amounted to 385,000 per year.  1. Compute the Fixed Unit Costs under Practical Capacity? 2. Compute the idle Capacity Cost under n

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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KARATE Corp. is capable of turning out 15 completed units every 30 seconds. The plant normally operates five days a week on a two eight-hour shift. Each year, the factory is closed 12 working days for holidays. Machinery is idle 750 hours for cleaning, oiling and maintenance. Normal sales averages 110,000 units a year over a five-year period. The expected sales volume for the year is 112,500 units. The fixed cost of operating the plant amounted to 385,000 per year. 

1. Compute the Fixed Unit Costs under Practical Capacity?

2. Compute the idle Capacity Cost under normal capacity if the plant operated at 3,400 hours?

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