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Abbott Suit Corporation (ASC) manufactures BOTH nylon AND cotton jogging suits. On 1/1/18, Erin Rogers ESTIMATES the following costs: Rent on corporate headquarters $20,000

Abbott Suit Corporation (ASC) manufactures BOTH nylon AND cotton jogging suits. On 1/1/18, Erin Rogers ESTIMATES the following costs:

Rent on corporate headquarters                                                 $20,000

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

Depreciation for cost accountant’s printer                                  $10,000

Abbott Suit Corporation use MACHINE HOURS TO ALLOCATE OVERHEAD (i.e. its VPDOH = $10/mh).

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

$8/dlh

4 dlh/suit

$5/dlh

VOH

2 mh/suit

$10/mh

4 mh/suit

$10/mh

Abbott Suit Believes that it can sell Nylon Jogging Suits for $180/suit and Cotton Jogging suits for $280/suit. Abbott Suit has a goal operating income of $60,000 and believe that it will sell 4 times as many Cotton jogging suits as nylon suits.

  1. Compute how many NYLON and COTTON jogging suits must be sold in order to achieve the goal operating income of $60,000.

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