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Albert Gadgets

Albert Gadgets - ALBERT'S GADGETS(A)1 Albert is the manager...

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ALBERT’S GADGETS (A) 1 Albert is the manager of a manufacturing company that has 100 widgets in inventory that it bought for $100 each. At the time of purchase, the company was using widgets to produce gadgets, but the company has stopped producing gadgets because they are almost obsolete. One of Albert’s old gadget customers is willing to purchase 100 gadgets at a price of $500 per gadget (the price last year was $800). Each gadget requires 1 widget, 10 labour hours, and 2 machine hours. There is excess labour and machine capacity, and labour costs $20 per hour. The company allocates its overhead on the basis of machine hours. During the coming year Albert expects to operate 2,500 hours, which is well below capacity. Based on that expectation, the budgeted overhead for the year is $500,000, which is an average of $200 dollars per machine hour. The analysis used to develop the overhead budget determined that a reasonable overhead budget model for operating levels between 2,000 and 3,000 machine hours is,
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Albert Gadgets - ALBERT'S GADGETS(A)1 Albert is the manager...

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