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Rundle Sporting Goods Corporation makes two types of racquets, tennis and badminton. The company uses the same facility to make both products even though the
Rundle Sporting Goods Corporation makes two types of racquets, tennis and badminton. The company uses the same facility to make both products even though the processes are quite different. The company has recently converted its cost accounting system to activitybased costing. The following are the cost data that Jane Price, the cost accountant, prepared for the third quarter of the year during which Rundle made tennis racquets and badminton racquets tableDirect Cost,Tennis Racquet TRBadminton Racquet BRDirect materials,$ per unit,$ per unitDirect labor, per unit, per unit tableCategorytableEstimatedCostCost Driver,Amount of Cost DriverUnit level,$Number of inspection hours,TR: hours; BR: hoursBatch level,Number of setups,TR: setups; BR: setupsProduct level,Number of TV commercials,TR: ; BR: Facility level,Number of machine hours,TR: hours; BR: hours Inspectors are paid according to the number of actual hours worked, which is determined by the number of racquets inspected. Engineers who set up equipment for both products are paid monthly salaries. TV commercial fees are paid at the beginning of the quarter. Facilitylevel cost includes depreciation of all production equipment. Required a Compute the cost per unit for each product. b If management wants to price badminton racquets percent above cost, what price should the company set?
Rundle Sporting Goods Corporation makes two types of racquets, tennis and badminton. The company uses the same facility to make both products even though the processes are quite different. The company has recently converted its cost accounting system to activitybased costing. The following are the cost data that Jane Price, the cost accountant, prepared for the third quarter of the year during which Rundle made tennis racquets and badminton racquets
tableDirect Cost,Tennis Racquet TRBadminton Racquet BRDirect materials,$ per unit,$ per unitDirect labor, per unit, per unit
tableCategorytableEstimatedCostCost Driver,Amount of Cost DriverUnit level,$Number of inspection hours,TR: hours; BR: hoursBatch level,Number of setups,TR: setups; BR: setupsProduct level,Number of TV commercials,TR: ; BR: Facility level,Number of machine hours,TR: hours; BR: hours
Inspectors are paid according to the number of actual hours worked, which is determined by the number of racquets inspected. Engineers who set up equipment for both products are paid monthly salaries. TV commercial fees are paid at the beginning of the quarter. Facilitylevel cost includes depreciation of all production equipment.
Required
a Compute the cost per unit for each product.
b If management wants to price badminton racquets percent above cost, what price should the company set?
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