Rundle Company makes fine jewelry that it sells to department stores throughout
ID: 2542658 • Letter: R
Question
Rundle Company makes fine jewelry that it sells to department stores throughout the United States. Rundle is trying to decide which of the two bracelets to manufacture. Cost data pertaining to the two choices follow:
Required
Identify the fixed costs and determine the amount of fixed cost for each product.
Identify the variable costs and determine the amount of variable cost per unit for each product.
Identify the avoidable costs and determine the amount of avoidable cost for each product.
Bracelet A Bracelet B Cost of materials per unit $ 25 $ 49 Cost of labor per unit 38 38 Advertising cost per year 8,100 6,400 Annual depreciation on existing equipment 6,300 4,700Explanation / Answer
Bracelet A Bracelet B 1) Fixed costs Advertising cost per year 8,100 6,400 Annual depreciation on existing equipment 6,300 4,700 Total fixed costs 14,400 11,100 2) Bracelet A Bracelet B Variable costs cost of materials per unit 25 49 cost of labor per unit 38 38 total variable costs 63 87 3) Bracelet A Bracelet B Avoidable costs cost of materials per unit 25 49 cost of labor per unit 38 38 Advertising cost per year 8,100 6,400
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