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Chad Davis, C&C Sports vice president for operations, recently received a sales brochure for a new electric cutting tool. Based on the tool's specifications, Chad
Chad Davis, C&C Sports vice president for operations, recently received a sales brochure for a new electric cutting tool. Based on the tool's specifications, Chad believes that C&C Sports could increase the batch size on jersey production to 50 jerseys, up from the current 35 jerseys. While the cutting tool would be used on pants and award jackets as well, other production factors prevent increasing the batch sizes for these products. The new tool would increase annual operating costs by $19,698. Before deciding whether to purchase the cutting tool, Chad wants to know how the new tool will affect the cost of producing the company's three products. Budgeted production 183,500 Units per Batch Cut per Batch Pants 50 66.500 50 Jerseys Jackets 18.000 5 Chenille Machine Corte Trable to Product Warehousine Paling Cutting 3 indirector $ 12.45 300 $ 70.0005 27.000 Detin 7.250 13.180 de mars 194030 57.74 170.750 209.226 5 Ben Sewing 55.875$ 61.835 155.633 General Total 129.606 $ 363,976 89,308 787.400 230.000 230,000 25,321 58,940 105,000 105.000 9.010 65,876 493.537 5 1.723.500 63,019 1 Other Total 5 2185 216.000 17020 143.7965 16.597 270.5155 12,726 248.9525 344,700$ B TO D F G H Total Cost 1 (A) 2 Product Design $ 143,796 3 Warehousing/Packaging $ 270,515 4 Cutting $ 248,952 S Sewing $ 344,700 Total Activity (B) 3 product lines 9,170 batches 56,580 cuts 86,175 direct labor hours Activity Rate (A) + (B) $ 47,932 per product line $ 29.50 per batch $ 4.40 per cut $ 4.00 per direct labor hour Calculate the total annual cost included in the cutting activity cost pool assuming the cutting tool is purchased. Total annual cost $
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