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4 5 6 7 One of your closest friends is an inventor and an entrepreneur who wants to start a business selling new, break through

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4 5 6 7 One of your closest friends is an inventor and an entrepreneur who wants to start a business selling new, break through office items: a new office chair that is more comfortable than any before it, and an office table that is the most functional on the market. The table even has padding that is made of the same materials as the cushions of the chairs to provide extra arm comfort . Your friend wants to start the business by opening a factory to produce the chairs and tables which can then be sold to cither wholesalers or retailers who will then sell them to the general public. After searching all over creation for the right sized building in the perfect location to properly meet the needs of his target customers, he found that the ideal building in which to put up the factory was right here in Petersburg all along 8 9 10 11 12 13 To build the chairs and tables, a machine was purchased and workers were hired. Part of the manufacturing process for both products is automated, and part of the manufacturing process for both products is done by hand. The mamber of each product to be produced is as follows: 14 15 16 17 18 19 20 21 22 Yearly Number Of Chairs To Be Produced Yearly Number Of Tables To Be Produced 104,000 80,000 It is determined that to produce each product, the following materials are needed: 23 Per Chair 27 Per Table 127 24 Square Feet of Wood 16 ICEL D G Yearly Number Of Tables To Be Produced 80,000 It is determined that to produce each product, the following materials are needed 19 20 21 22 23 24 Per Chair 27 9 7 Square Feet of Wood Square Feet of Fabric Square Feet of Foam Per Table 127 7 5 25 26 27 Materials can be purchased for the following amounts: 28 29 30 31 Wood $0.23 Fabric $0.52 Foam $0.13 Purchase Price Per Square Foot 32 33 34 It takes the following amounts of time to produce each product. Workers who produce each product are also paid the following hourly wage: 35 36 37 38 Chair 10 $17.00 Table 25 $22.00 Minutes To Produce Each Product Worker Hourly Wage 20 B F A G D E It has been determined that the production process for both chairs and tables involves the following activities with their related activity drivers Production Activities Machine Setups Machining Quality Control Inspections Activity Driver Number of Setups Machine Hours Hours of Analysis Number of Inspections Type Variable Variable Fixed Fixed 5 It has been determined that each activity will require the following amounts of money and each product will consume the following amounts of each activity driver + 7 B 9 0 61 52 53 54 55 56 57 Activity Drivers Machine Setups: Number of Setups Materials Moves: Number of Material Moves Machining Machine Hours Quality Control Hours of Analysis Inspections: Number of Inspections Total Dollars Of Each Activity $35,000 $35.000 $60,000 $78,000 $78,000 Chairs 72 42 17,200 10,200 700 Tables 47 57 23,200 12,200 950 3) Factory Overhead Cost per Chair and Table Answer: Explanation: 4) Total Cost Per Chair and Table Answer: Explanation: 7 8 9 90 91 5) Variable Cost per Chairs and Table 92 Answer: 93 Explanation: 6) Fixed Cost per Chair and Table Answer: Explanation: 3 4 05 06 17

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