Question
Regal Toys Corp. produces a board game, a paint-by-number set, and a jigsaw puzzle. Production and sales information is as follows: Board Game Paint-By-Number Jigsaw
Regal Toys Corp. produces a board game, a paint-by-number set, and a jigsaw puzzle. Production and sales information is as follows:
|
| Board Game |
| Paint-By-Number |
| Jigsaw Puzzle |
Units produced and sold |
| 10,000 units |
| 5,000 units |
| 2,500 units |
Sales price per unit |
| $10.00 |
| $19.00 |
| $9.00 |
Direct materials per unit |
| $4.05 |
| $5.80 |
| $1.75 |
Direct labor per unit |
| $1.20 |
| $1.60 |
| $0.90 |
Machine hours per unit |
| 1 MH |
| 3 MH |
| 2 MH |
Regal Toys incurred $96,000 in fixed manufacturing overhead, which is applied based on the practical capacity of machine hours. Regal Toys also incurred $0.40/machine hour in variable manufacturing overhead. Regal Toys has a practical capacity of 40,000 machine hours.
Determine the total amount of excess capacity costs.
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