Question
My answer to #1: Machine Hours for Manufactured In-Line Skates Variable Machine Operating Cost $24 Per Machine Hour $16 $24/16 = 1.5 Machine Hours Machine
My answer to #1:
Machine Hours for Manufactured In-Line Skates | |
Variable Machine Operating Cost | $24 |
Per Machine Hour | $16 |
$24/16 = 1.5 Machine Hours |
Machine Hours for Snowboard Bindings | |
Variable Machine Operating Cost | $8 |
Per Machine Hour | $16 |
$8/16 = 0.50 Machine Hours |
Cost of Unused Manufacturing Capacity | ||
Number of Machine Hours Available | Max Capacity of Producing In-Line Skates Annually X Machine Hours for In-Line Skates | 5000 units X 1.5 Machine Hours = 7,500 Hours |
Total Machine Hours Used | Units Produced X Machine Hours for Snowboard Bindings | 12,000 units X 0.5 Hours = 6,000 Total Machine Hours |
Unused Machine Hours | Number of Machine Hours Available Total Machine Hours Used | 7,500 Hours 6,000 Hours = 1,500 Unused Machine Hours |
Cost of Unused Manufacturing Capacity | (Unused Machine Hours/Machine Hours Available) *Fixed Manufacturing Overhead Costs | (1,500/7,500) * $30,000 = $6,000 |
I need help with question 2 and 3. Please and thank you.
Omnisport Company Omnisport manufactures and sells sports equipment. It currently produces and sells 5,000 pairs (units) of in-line skates each year, operating at maximum machine capacity. Omnisport's market research has revealed that it could sell 8,000 pairs of in-line skates annually. Calcott Inc., a nearby supplier, has offered to supply up to 6,000 pairs of in-line skates at a price of $75 per pair. However, Jack Petrone, Omnisport's product manager, has noticed the current snowboarding craze and believes that Omnisport could sell up to 12,000 pairs (units) of snowboard bindings annually. Omnisport's management accountant summarizes the available data: Manufactured Snowboard Inline Skates Bindings (pair) (pair) $98 $60 Purchased Inline Skates (pair) $98 $75 20 20 Selling Price Cost per unit Purchase cost Direct material Variable machine operating cost ($16 per machine hour) Variable and fixed manufacturing overhead (allocation base: machine hours) Variable marketing and administrative cost 24 8 18 6 9 8 8 Fixed manufacturing overhead costs of $30,000 are not affected by the product-mix decision. Fixed manufacturing overhead costs are allocated to products based on a machine- hour rate, which is calculated by dividing total fixed manufacturing overhead costs of $30,000 by machine-hour capacity. Fixed marketing and administrative costs of $60,000 are not affected by the product- mix decision. Required: 1. How many machine-hours does each pair of manufactured in-line skates need? Each pair of snowboard bindings? If Omnisport produces only 12,000 pairs of snowboard bindings, what would be the cost of unused manufacturing capacity? 2. Calculate the variable manufacturing overhead rate per machine-hour. 3. Calculate the contribution margin per unit for manufactured in-line skates, snowboard bindings, and purchased in-line skates. 4. Use Solver to determine the quantity of each product that Omnisport should manufacture and sell or purchased and sell to maximize operating income. What is the maximum operating income Omnisport can earnStep by Step Solution
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