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Chicory Sporting Goods Corporation makes two types of racquets, tennis and badminton. The company uses the same facility to make both products even though the
Chicory Sporting Goods Corporation makes two types of racquets, tennis and badminton. The company uses the same facility to make both products even though the processes are quite different. The company has recently converted its cost accounting system to activitybased costing. The following are the cost data that Jane Price, the cost accountant, prepared for the third quarter of during which Horten made tennis racquets and badminton racquets No credit will be given unless you show all you work
Inspectors are paid according to the number of actual hours worked, which is determined by the number of racquets inspected. Engineers who set up equipment for both products are paid monthly salaries. TV commercial fees are paid at the beginning of the quarter. Facilitylevel cost includes depreciation of all production equipment.
Required
Round your figures to two decimal points.
a Compute the cost per unit for each product.
b If management wants to price badminton racquets percent above cost, what price should the company set?
c The market price of tennis racquets has declined sustainability because of new competitors entering the market. Management asks you to determine the minimum cost of producing tennis racquets in the short term. Provide that information.
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