Abbott Suit Corporation (ASC) manufactures BOTH nylon AND cotton jogging suits and this is its cost structure Rent on MANUFACTURING facility $30,000 Salaries for CEO, cost accountant, administrative staff $10,000 Depreciation for MANUFACTURING facility $10,000 $50,000 Erin Rogers, UW M graduate, creates the following standards for the two jogging suits Nylon Jogging Suits Cotton Jogging Suits Std qty suit Std price input Std qty suit Std price input Direct Materials 2 yds suit $10 yd 3 yds suit $20 yd Direct Labor 5 dlh suit $10 dlh 4 dlh suit $5 dlh VOH utilities grease 2 mh suit $10 mh 4 mh suit $10 mh VOH indirect labor 5 dlh suit $10 dlh 4 dlh suit $10 dlh Assume the above standards are 100 accurate and that nylon suits sell for $200, whereas cotton jogging suits sell for $250 Answer the following questions If there is no capacity issue with the sewing machine, which suit would ASC rather sell, nylon or cotton Assume that there IS a capacity issue, in that the sewing machine can ONLY work 3600 (about 10 hours a day) hours (or it will break) Also, assume that annual demand for nylon suits is 800 and annual demand for cotton is also 800 What is the optimal product mix in terms of making selling nylon and cotton suits SHOW YOUR WORK Use your answer to 2 to create the status quo Fischer machine comes up with the following offer hey, we can RENT you an extra sewing machine for $4,000 and it has a capacity of another 3,600 hours Do you take the offer SHOW YOUR WORK Use your answer to 2, to create the status quo Swenson Oil Company approaches Abbott Company with the following offer IF you pay us $3,000, our oil will allow your company to reduce the machine hours per nylon suit to 1 machine nylon suit and 2 machine hours per cotton suit Do you take the offer Why or why not SHOW YOUR WORK Use your answer to 2, to create the status quo McCarthy nylon company comes up with the following offer hey, if you buy OUR nylon at $20 yard, you can advertise this (at $1,000 per year) AND be able to sell your nylon suits for $250 (rather than $200) Do you take the offer Why or why not Abbott Cider Company makes Apple Cider ONLY 1 PRODUCT Here is its 2018 results Units produced 10,000 gallons Apples used 100,000apples at $1 apple 2 employees who work making the cider worked 4,000 dlh and were paid $20 dlh Abbott paid the following bills $1 of commission for each gallon of apple cider sold Abbott Sold 8,000 gallons of cider at $40 gallon Factory utilities of $40,000 Factory rent of $10,000 Factory depreciation of $10,000 Production supervisor salary of $20,000 CEO CFO salaries of $28,000 PREPARE the 2018 Income statement using (a) Absorption costing (b) CVP

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Abbott Suit Corporation (ASC) manufactures BOTH nylon AND cotton jogging suits and this is its cost structure. Rent on MANUFACTURING facility $30,000 Salaries for CEO,

Abbott Suit Corporation (ASC) manufactures BOTH nylon AND cotton jogging suits and this is its cost structure.

Rent on MANUFACTURING facility $30,000

Salaries for CEO, cost accountant, administrative staff $10,000

Depreciation for MANUFACTURING facility $10,000

$50,000

Erin Rogers, UW-M graduate, creates the following standards for the two jogging suits:

	Nylon Jogging Suits		Cotton Jogging Suits
	Std.qty/suit	Std.price/input	Std.qty/suit	Std.price/input
Direct Materials	2 yds/suit	$10/yd	3 yds/suit	$20/yd
Direct Labor	5 dlh/suit	$10/dlh	4 dlh/suit	$5/dlh
VOH utilities/grease	2 mh/suit	$10/mh	4 mh/suit	$10/mh
VOH indirect labor	5 dlh/suit	$10/dlh	4 dlh/suit	$10/dlh

Assume the above standards are 100% accurate and that nylon suits sell for $200, whereas cotton jogging suits sell for $250. Answer the following questions:

If there is no capacity issue with the sewing machine, which suit would ASC rather sell, nylon or cotton?
Assume that there IS a capacity issue, in that the sewing machine can ONLY work 3600 (about 10 hours a day) hours (or it will break). Also, assume that annual demand for nylon suits is 800 and annual demand for cotton is also 800. What is the optimal product mix in terms of making/selling nylon and cotton suits? SHOW YOUR WORK.
Use your answer to #2 to create the status quo. Fischer machine comes up with the following offer hey, we can RENT you an extra sewing machine for $4,000 and it has a capacity of another 3,600 hours!. Do you take the offer? SHOW YOUR WORK.
Use your answer to #2, to create the status quo. Swenson Oil Company approaches Abbott Company with the following offer IF you pay us $3,000, our oil will allow your company to reduce the machine hours per nylon suit to 1 machine/nylon suit and 2 machine hours per cotton suit!. Do you take the offer? Why or why not? SHOW YOUR WORK.
Use your answer to #2, to create the status quo. McCarthy nylon company comes up with the following offer hey, if you buy OUR nylon at $20/yard, you can advertise this (at $1,000 per year) AND be able to sell your nylon suits for $250 (rather than $200). Do you take the offer? Why or why not?
Abbott Cider Company makes Apple Cider=> ONLY 1 PRODUCT. Here is its 2018 results:
1. Units produced: 10,000 gallons.
2. Apples used => 100,000apples at $1/apple
3. 2 employees who work making the cider worked 4,000 dlh and were paid $20/dlh.
4. Abbott paid the following bills:
  1. $1 of commission for each gallon of apple cider sold.
  2. Abbott Sold 8,000 gallons of cider at $40/gallon.
  3. Factory utilities of $40,000.
  4. Factory rent of $10,000.
  5. Factory depreciation of $10,000.
  6. Production supervisor salary of $20,000.
  7. CEO/CFO salaries of $28,000.
5. PREPARE the 2018 Income statement using (a) Absorption costing (b) CVP.