Question
Razer is the world's leading lifestyle brand for gamers and one of the most recognized brands in the global gaming and esports communities. Razer is
Razer is the world's leading lifestyle brand for gamers and one of the most recognized brands in the global gaming and esports communities. Razer is reviewing the performance of its subsidiary PC Gamer Company. PC Gamer Company manufactures wireless gaming mouse under the Razer brand, for the computer gaming industry. Last year PC Gamer Company sold 500,000 wireless gaming mouses at $20 each. Total costs amounted to $7.5m (million), of which $5.5m were considered fixed. The management accountant has reported to Razer that PC Gamer Company's fixed costs of $5.5m consisted of facility-level factory overhead of $0.5m and fixed selling and administrative costs of $1.5m with the remaining fixed overhead costs consisting of setup cost, engineering cost, inspection cost and material handling cost as follows:
Setup cost 1,000 setups $1,000 per setup Engineering cost 6,000 hours $100 per hour Inspection cost 16,000 inspections $100 per inspection Material handling cost 3,000 batches $100 per batchSetup cost 2,000 setups $350 per setup Engineering cost 2,000 hours $150 per hour Inspection cost 10,000 inspections $100 per inspection Material handling cost 5,000 batches $100 per batchStep by Step Solution
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