Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Franklin Furniture Incorporated (FFI) manufactures bedroom furniture in sets (a set includes a dresser, two queen-size beds, and one bedside table) for use in

image text in transcribedimage text in transcribed

Franklin Furniture Incorporated (FFI) manufactures bedroom furniture in sets (a set includes a dresser, two queen-size beds, and one bedside table) for use in motels and hotels. FFI has three customer groups, which it calls the value, quality, and luxury groups. The value products are targeted to low-price motels that are looking for simple furniture, while the luxury furniture is targeted to the very best hotels. The value line is attractive to a variety of hotels and motels that appreciate the combination of quality and value. Currently there has been a small increase in the quality and value lines, and an appreciable increase in demand in the luxury line, reflecting cyclical changes in the marketplace. Luxury hotels are now in more demand for business travel, while a few years ago, the value segment was the most popular for business travelers. FFI wants to be able to respond to the increased demand with increased production but worries about the increased production cost and about price setting as its mix of customers and production changes. FFI has used a volume- based overhead allocation rate based on direct labor hours for some time. Direct labor cost is $15 per hour. Materials handling Product scheduling Setup labor Automated machinery Finishing Pack and ship General, selling, and administrative costs The budgeted production data for the three product lines follow. Product Lines Sets produced Price Direct materials cost per set Number of parts per set Value 15,000 $650 Budgeted Cost Cost Driver $ 349,600 160,000 216,000 1,750,000 619,500 290,400 $ 3,385,500 $ 5,000,000 Quality 5,000 $ 900 Number of parts Number of production orders Number of setups Machine hours Direct labor hours. Number of orders shipped Luxury 600 $ 1,200 Direct labor hours per set Machine hours per set Production orders Production setups Orders shipped Number of inspections $ 80 $ 50 $ 110 30 50 120 4 5 7 3 7 15 50 70 200 20 50 50 1,000 2,000 300 2 6 14

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

College Accounting A Contemporary Approach

Authors: David Haddock, John Price, Michael Farina

3rd edition

77639731, 978-0077639730

More Books

Students also viewed these Accounting questions

Question

3 Analyze the fi nancial and legal aspects of employment.

Answered: 1 week ago