Question: (please use excel to answer)
Balance Cabinet Makers (BCM) has a factory that produces custom bathroom cabinets. It has multiple product lines. Materials and labor for the cabinets are determined by each job. To simplify the assignment, we will assume the following average costs The following information highlights BCM's cost structure for 2022. The materials include $1,500 for the wood and other materials on a per job basis. It requires 20 hours of labor on average for a custom bathroom. The hourly rate is $14. The sales price will be set at a markup of 75%. The company estimates that it will have 20,000 direct labor hours in total for the bathroom cabinets. It assumes 1,000 units are sold on average per year. A breakdown of estimated yearly costs related to the bathroom cabinets follows: Salaries-office & administrative Salaries for factory supervisors, janitor and security Office Rent Factory Rent Office Utilities and Misc office expenses(based on units sold) SalesTravel(based on units sold) Insurance - office Depreciation - office equipment Depreciation for factory equipment Advertising Sales commissions(based on units sold) Factory Property taxes Maintenance for factory equipment Hint: you will need to distinguish between product vs. period costs and variable vs fixed costs. Please do not forget all costs for this company(not just the ones listed above in the table) $375,000 $ 180,000 $ 125,000 $ 25,000 $ 10,000 $ 24,000 $ 12,000 $ 40,000 $ 70,000 $ 20,000 $ 45,000 $ 10,000 $ 80,000 Assuming BCM is considering adding another product line - bookshelves (keeping the cabinet production constant at 1,000 units). How many units should the company sell to make adding the additional line economically feasible/attractive? Adding this line will require hiring a different type of worker which costs the company $15/hour. BCM estimated each unit takes 10 hours of labor, and $500 direct materials. This line is estimated to incur additional fixed MOH $466,250 for the year, and variable costs/expenses per unit are the same as the cabinet product line. This bookshelf product line does not add additional fixed period costs but shares the fixed period costs with the Cabinet line. The company estimated sales price of each bookshelf would be $1,500
