Question
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.
- 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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