Zachary Chairs, Inc. makes two types of chairs. Model Diamond is a high-end product designed for professional offices. Model Gold is an economical product designed for family use. Jane Silva, the president, is worried about cut-throat price competition in the chairs market. Her company suffered a loss last quarter, an unprecedented event in its history. The companys accountant prepared the following cost data for Ms. Silva:
The market price for office chairs comparable to Model Diamond is $124 and to Model Gold is $77. Required
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Compute the cost per unit for both products.
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Dan Barker, the chief engineer, told Ms. Silva that the company is currently making 179 units of Model Diamond per batch and 114 units of Model Gold per batch. He suggests doubling the batch sizes to cut the number of setups in half, thereby reducing the setup cost by 50 percent. Compute the cost per unit for each product if Ms. Silva adopts his suggestion.
Zachary Chairs, Inc. makes two types of chairs. Model Diamond is a high-end product designed for professional offices. Model Gold is an economical product designed for family use. Jane Silva, the president, is worried about cut-throat price competition in the chairs market. Her company suffered a loss last quarter, an unprecedented event in its history. The company's accountant prepared the following cost data for Ms. Silva: Model Diamond (D) Model Gold (G) Direct Cost per Unit Direct materials $19.10 per unit hours production $17.70/hour x 2.00 time $9.40 per unit $17.70/hour x1.00 hour production time Direct labor Category Unit level Batch level Product level Facility level Total Estimated Cost $ 280,600 782,000 546,000 Cost Driver Use of Cost Driver Number of units D: 20,000 units; G: 26,000 units Number of setups D: 112 setups; G: 228 setups Number of TV D: 7; G: 14 commercials Number of machine hours D: 1,600 hours; G: 2,900 hours 585,000 $2,193,600 The market price for office chairs comparable to Model Diamond is $124 and to Model Gold is $77. Required a. Compute the cost per unit for both products. b. Dan Barker, the chief engineer, told Ms. Silva that the company is currently making 179 units of Model Diamond per batch and 114 units of Model Gold per batch. He suggests doubling the batch sizes to cut the number of setups in half, thereby reducing the setup cost by 50 percent. Compute the cost per unit for each product if Ms. Silva adopts his suggestion. (For all requirements, round intermediate calculations and final answers to 2 decimal places.) Zachary Chairs, Inc. makes two types of chairs. Model Diamond is a high-end product designed for professional offices. Model Gold is an economical product designed for family use. Jane Silva, the president, is worried about cut-throat price competition in the chairs market. Her company suffered a loss last quarter, an unprecedented event in its history. The company's accountant prepared the following cost data for Ms. Silva: Model Gold (G) Direct Cost per Model Diamond (D) Unit Direct $19.10 per unit materials Direct labor $17.70/hour x 2.00 hours production time $9.40 per unit hour production $17.70/hour X1.00 time Estimated Cost Category Unit level $ 280,600 782,000 546,000 Batch level Product level Facility level Total Cost Driver Number of units Number of setups Number of TV commercials Number of machine hours Use of Cost Driver D: 20,000 units; G: 26,000 units D: 112 setups; G: 228 setups D: 7; G: 14 D: 1,600 hours; G: 2,900 hours 585,000 $2,193,600 The market price for office chairs comparable to Model Diamond is $124 and to Model Gold is $77. Required a. Compute the cost per unit for both products. b. Dan Barker, the chief engineer, told Ms. Silva that the company is currently making 179 units of Model Diamond per batch and 114 units of Model Gold per batch. He suggests doubling the batch sizes to cut the number of setups in half, thereby reducing the setup cost by 50 percent. Compute the cost per unit for each product if Ms. Silva adopts his suggestion. (For all requirements, round Intermediate calculations and final answers to 2 decimal places.) Cost per Unit Type of Product a. Model Diamond Model Gold b. Model Diamond Model Gold Zachary Chairs, Inc. makes two types of chairs. Model Diamond is a high-end product designed for professional offices. Model Gold is an economical product designed for family use. Jane Silva, the president, is worried about cut-throat price competition in the chairs market. Her company suffered a loss last quarter, an unprecedented event in its history. The company's accountant prepared the following cost data for Ms. Silva: Model Diamond (D) Model Gold (G) Direct Cost per Unit Direct materials $19.10 per unit hours production $17.70/hour x 2.00 time $9.40 per unit $17.70/hour x1.00 hour production time Direct labor Category Unit level Batch level Product level Facility level Total Estimated Cost $ 280,600 782,000 546,000 Cost Driver Use of Cost Driver Number of units D: 20,000 units; G: 26,000 units Number of setups D: 112 setups; G: 228 setups Number of TV D: 7; G: 14 commercials Number of machine hours D: 1,600 hours; G: 2,900 hours 585,000 $2,193,600 The market price for office chairs comparable to Model Diamond is $124 and to Model Gold is $77. Required a. Compute the cost per unit for both products. b. Dan Barker, the chief engineer, told Ms. Silva that the company is currently making 179 units of Model Diamond per batch and 114 units of Model Gold per batch. He suggests doubling the batch sizes to cut the number of setups in half, thereby reducing the setup cost by 50 percent. Compute the cost per unit for each product if Ms. Silva adopts his suggestion. (For all requirements, round intermediate calculations and final answers to 2 decimal places.) Zachary Chairs, Inc. makes two types of chairs. Model Diamond is a high-end product designed for professional offices. Model Gold is an economical product designed for family use. Jane Silva, the president, is worried about cut-throat price competition in the chairs market. Her company suffered a loss last quarter, an unprecedented event in its history. The company's accountant prepared the following cost data for Ms. Silva: Model Gold (G) Direct Cost per Model Diamond (D) Unit Direct $19.10 per unit materials Direct labor $17.70/hour x 2.00 hours production time $9.40 per unit hour production $17.70/hour X1.00 time Estimated Cost Category Unit level $ 280,600 782,000 546,000 Batch level Product level Facility level Total Cost Driver Number of units Number of setups Number of TV commercials Number of machine hours Use of Cost Driver D: 20,000 units; G: 26,000 units D: 112 setups; G: 228 setups D: 7; G: 14 D: 1,600 hours; G: 2,900 hours 585,000 $2,193,600 The market price for office chairs comparable to Model Diamond is $124 and to Model Gold is $77. Required a. Compute the cost per unit for both products. b. Dan Barker, the chief engineer, told Ms. Silva that the company is currently making 179 units of Model Diamond per batch and 114 units of Model Gold per batch. He suggests doubling the batch sizes to cut the number of setups in half, thereby reducing the setup cost by 50 percent. Compute the cost per unit for each product if Ms. Silva adopts his suggestion. (For all requirements, round Intermediate calculations and final answers to 2 decimal places.) Cost per Unit Type of Product a. Model Diamond Model Gold b. Model Diamond Model Gold
