Question
Estimated sales 18,000 books Beginning inventory 0 books Average selling price $77 per book Variable production costs $52 per book Fixed production costs $288,000 per
| Estimated sales | 18,000 books |
|---|---|
| Beginning inventory | 0 books |
| Average selling price | $77 per book |
| Variable production costs | $52 per book |
| Fixed production costs | $288,000 per semester |
The fixed-cost allocation rate is based on expected sales and is therefore equal to
$288,000
18,000
books =
$16
per book.
b. Include nonfinancial measures when evaluating management and rewarding performance. One nonfinancial measure is to compute the excess production ratio. Determine the formula, then compute the ratio at each production level. (Round the ratios to two decimal places.)
| # of books | = | Excess production ratio | |||
| 18,000 | = | ||||
| 27,000 | = | ||||
| 29,700 | = |
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Cost Accounting A Managerial Emphasis
Authors: Charles T. Horngren, Srikant M.Dater, George Foster, Madhav
13th Edition
8120335643, 136126634, 978-0136126638
