Compute the adjusted capacity for the committed resource

Reference no: EM132755578

Question - Committed / Fixed Resource - Ratliff Appliances Company makes a household appliance with model number RM16. The goal for 2020 is to reduce direct materials usage per unit. No defective units are currently produced. Manufacturing conversion costs depend on production capacity defined in terms of RM16 units that can be produced. The industry market size for appliances increased 10% from 2019 to 2020. The following additional data are available for 2019 and 2020:

	2019	2020
Units Produced & Sold	33,000	37,950
Selling Price	$360	$345
Direct Materials (square fee)	82,500	87,000
Direct Material Costs per square foot	$31	$33
Manufacturing capacity (units)	41,250	39,850
Total Conversion Costs	$866,250	$797,000
Conversion Costs per unit of capacity	$21	$20

Required - Compute the adjusted capacity for the committed/fixed resource.

Reference no: EM132755578

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