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DochEvi [55]
2 years ago
11

Suppose, you own a screen-printing business and you enter into a contract with a local school to print 50 orange t-shirts with t

he school name and their mascot on the front. Each shirt costs $10. Before the shirts are delivered, the school breaches the contract. You are now stuck with 50 shirts you cannot resell because no one wants t-shirts with someone else's school name and mascot on the front. What amount can you sue for if you sue for damages
Business
1 answer:
LUCKY_DIMON [66]2 years ago
6 0

Answer: $500

Explanation:

Based on the scenario in the question, there's a breach of contract as the shirts aren't delivered and there are 50 t-shirts which cost $10 each that no one law is willing to buy because it has a school name and their mascot on the front.

Here, the maker of the shirt can sue for damages and since there's no resale, the amount to be sued for damages will be the price of each shirt multiplied by the total number of shirt. This will be:

= $10 × 50

= $500

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The following data are for the two products produced by Tadros Company. Product A Product BDirect materials$20 per unit $30 per
fenix001 [56]

Answer:

Tadros Company

Plantwide method:

                                                     Product A    Product B

1.1. Manufacturing cost per unit         $40            $85

1.2 Gross profit per unit                      $15           $135

2.1 Gross profit per customer        $300           $675

2.2 Customer of customer to each customer is:

= $80

The gross profit is adequate for each customer.

ABC method:

                                                                 Product A    Product B

3.1The Manufacturing cost per unit         $36.26         $101.61

3.2 Gross profit per unit                             $18.74         $118.39

4.1 Gross profit per customer                $374.85        $591.94

4.2 Cost of customer service  to each customer is $80.

The Gross profit per customer is adequate.

5. The ABC product costing method gives better information to managers of Tadros Company.

c. Activity-based costing method                          

Explanation:

a) Data and Calculations:

                                             Product A                     Product B

Direct materials                   $20 per unit                 $30 per unit

Direct labor hours                0.5 DLH/unit                 1.5 DLH per unit

Total direct labor hours       8,000 (0.5*16,000)       5,400 (1.5*3,600)

Direct labor costs                $160,000 ($20*8,000) $108,000 ($20*5,400)

Machine hours                     0.4 MH per unit            1.2 MH per unit

Batches                                200 batches                 360 batches

Volume                                16,000 units                  3,600 units

Engineering modifications  20 modifications          80 modifications

Number of customers         800 customers            720 customers

Market price                        $55 per unit                 $220 per unit

Direct labor rate  = $20 per direct labor hour (DLH).

Overhead rates based:

a. Plantwide Method:

Total manufacturing overhead costs/Total direct labor hours

$268,000/13,400 = $20

Cost of production:

                                                       Product A        Product B

Direct materials per unit               $320,000         $90,000

Direct labor hours per unit DLH      160,000          108,000

Overhead costs                                160,000          108,000

Total production costs                  $640,000       $306,000

Volume                                          16,000 units     3,600 units

Manufacturing cost per unit         $40                   $85

Income Statement:

                                                     Product A        Product B

Sales Revenue ($55 and $220)  $880,000      $792,000

Total production costs                   640,000        306,000

Gross profit                                  $240,000      $486,000

Volume                                       16,000 units     3,600 units

Gross profit per unit                       $15                $135

Gross profit                                  $240,000      $486,000

Customers                                  800 customers  720 customers

Gross profit per customer          $300              $675

b. Departmental Method:

c. ABC Method:

Additional information follows:

Cost Pools                     Overhead       Costs Driver

Indirect manufacturing

Engineering support      $ 53,600      Engineering modifications

Electricity                           53,600       Machine hours

Setup costs                      160,800       Batches

Nonmanufacturing

Customer service             121,600      Number of customers

Overhead rate using ABC:

Cost Pools                     Overhead       Costs Driver                    Rates

Indirect manufacturing

Engineering support      $ 53,600      100 modifications         = $536

Electricity                           53,600       10,720 Machine hours        $5

Setup costs                      160,800       560 Batches                   $287

Customer service             136,800      1,520 customers              $90

Cost of production:

                                                      Product A        Product B

Direct materials per unit              $320,000         $90,000

Direct labor hours per unit DLH     160,000          108,000

Overhead costs:

Engineering support                         10,720            42,880

Electricity                                          32,000            21,600

Setup costs                                      57,400          103,320

Total production costs                $580,120       $365,800

Volume                                        16,000 units     3,600 units

Manufacturing cost per unit         $36.26        $101.61

Income Statement:

                                                     Product A        Product B

Sales Revenue ($55 and $220)  $880,000      $792,000

Total production costs                    580,120        365,800

Gross profit                                   $299,880     $426,200

Volume                                       16,000 units     3,600 units

Gross profit per unit                     $18.74           $118.39

Gross profit                              $299,880                   $426,200

Customers                               800 customers           720 customers

Gross profit per customer      $374.85                       $591.94

Total production costs             $580,120                   $365,800

Customers                               800 customers           720 customers

Cost per customer                  $725.15                       $508.06

Customer service costs

Customer service             $121,600/1,520 = $80

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