One of your closest friends is an inventor and an entrepreneur who wants to start a business selling new, break-through office items a new office chair that is more comfortable than any before it, and an office table that is the most functional on the market. The table even has padding that is made of the same materials as the cushions of the chairs to provide extra arm comfort. Your friend wants to start the business by opening a factory to produce the chairs and tables which can then be sold to either wholesalers or retailers who will then sell them to the general public. After searching all over creation for the right sized building in the perfect location to properly meet the needs of his target customers, he found that the ideal building in which to put up the factory was right here in Petersburg all along To build the chairs and tables, a machine was purchased and workers were hired. Part of the manufacturing process for both products is automated, and part of the manufacturing process for both products is done by hand. The number of each product to be produced is as follows: Yearly Number of Chairs To Be Produced 103,000 Yearly Number Of Tables To Be Produced 79.000 It is determined that to produce cach product, the following materials are needed: Square Feet of Wood Square Feet of Fabric Square Feet of Foam Per Chair 22 5 7 Per Table 120 20 15 Materials can be purchased for the following amounts: Wood Fabric Foam Purchase Price Per Square Foot S0.22 50.40 S0.10 It takes the following amounts of time to produce each product. Workers who produce each product are also paid the following hourly wage: Minutes To Produce Each Product Worker Hourly Wage Chair 15 $12.00 Table 30 $15.00 It has been determined that the production process for both chairs and tables involves the following activities with their related activity drivers: Production Activities Machine Setups Materials Moves Machining Quality Control Inspections Activity Driver Number of Setups Number of Material Moves Machine Hours Hours of Analysis Number of Inspections Type Variable Variable Variable Fixed Fixed It has been determined that each activity will require the following amounts of money and each product will consume the following amounts of each activity driver: Activity Drivers Machine Setups: Number of Setups Materials Moves: Number of Material Moves Machining Machine Hours Quality Control: Hours of Analysis Inspections: Number of Inspections Total Dollars Or Each Activity S55,000 $32,000 S$7,000 $70,000 $78,000 Chairs 65 32 14.900 12.100 350 Tables 42 58 24,000 13.000 725 Using what you read in the Information section, please determine the following. Make sure that your answers explain how you performed your calculations: 1) Direct Materials Cost per Chair and Table Answer: Explanation: 2) Direct Labor Cost per Chair and Table Answer: Explanation: 3) Factory Overhead Cost per Chair and Table Answer: Explanation: 4) Total Cost Per Chair and Table Explanation: Answer: 5) Variable Cost per Chairs and Table Explanation Answer: 6) Fixed Cost per Chair and Table Answer: Explanation
