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31 5 points Problem 5-18A (Algo) Pricing decisions made with ABC system cost data LO 5-1, 5-2,5-3 Zachary Sporting Goods Corporation makes two types
31 5 points Problem 5-18A (Algo) Pricing decisions made with ABC system cost data LO 5-1, 5-2,5-3 Zachary 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 2018 (during which Zachary made 70,500 tennis racquets and 30,600 badminton racquets). Direct Cost Direct materials Direct labor Tennis Racquet (TR) $17.60 per unit 34.50 per unit Category Unit level Batch level Product level Facility level Total Badminton Racquet (BR) $13.60 per unit 24.70 per unit Estimated Cost Cost Driver $ 713,000 297,600 Number of inspection hours Number of setups 142,500 792,000 $1,945,100 Number of TV commercials Number of machine hours Amount of Cost Driver TR: 16,000 hours; BR: 7,000 hours TR: 81 setups; BR: 43 setups TR: 3; BR: 2 TR: 32,000 hours; BR: 34,000 hours 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? Check my work
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