Question

Use below information for Questions 14 to 15:

Company X produces dining chairs and tables. The following budget information is available:

Item                                     Dining Chairs                     Tables                                  Total Cost

Machine Setups                               250                        600                                        TL48,700            

Inspections                                        250                        400                                       TL72,000                            

Labor hours                                       2,700                     2,400

Q-14) Compute total machine setups and inspection costs assigned to Dining Chairs, using plantwide method if the allocation base is labor hours.

Q-15) Compute total machine setups and inspection costs assigned to Tables, using ABC.

Q-16) A company has a unit contribution margin of $125 and a contribution margin ratio of 40%. What is the unit selling price?

Q-17) Jane Botosan operates a bed and breakfast hotel in a resort area near Lake Michigan. Depreciation on the hotel is $60,500 per year. Jane employs a maintenance person at an annual salary of $41,000 and a cleaning person at an annual salary of $24.000. Real estate taxes are $10.000 per year. The rooms rent at an average price of $120 per person per night including breakfast. Other costs are laundry and cleaning service at a cost of $10.00 per person per night and the cost of food which is $5.00 per person per night. Jane is considering changing the business strategy. She considers installing additional cleaning machines which will decrease laundry and cleaning service per person per night by $3.70. However, fixed depreciation cost will increase by $4.000. Determine the mimber of rentals at which Jane would be indifferent between the current and proposed business models.

Answer 1