ACTG 2P21 S01 June 23 2010

ACTG 2P21 S01 June 23 2010 - Consider why do we use...

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ACTG 2P21 S01 June 23 2010 Problem 9.48 from text We are a service company that generates and has branches Generation Rockford Peoria Hammond Kankakee $25000 $30000 $20000 $15000 VOH (6000)CR .2*8000 =1600 1800 1400 1200 Total VOH 26600 31800 21400 16200 130000 145000 90000 150000 (9000) .18*10000 =1800 3600 2160 1440 Total Fixed OH 131800 148600 92160 15440 131800+26600 =158400 Transfer rate=$6000/30000KwH=0.2$/KwH $9000/50000KwH=.18$/KwH Notice we are using a budgeted rate in our variable calculation, but our fixed rate is based on the maximum amount we could consume. To get the VOH POR we could take total voh (26600) and divide it by total labour hours to get 20000 of .1$/DLH
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Unformatted text preview: Consider why do we use capacity? Because we always want to attach a cost into the thing that caused that cost. Sometimes our link is quite weak, and we get stuck because our information is weak. For variable costs our decision to make another unit will make the cost go up. We are always attaching the cost to the original decision to have that cost. So this generation plant was made a long time ago based on the requests put out by the towns. So they built the plant and told each of the towns that they were responsible for their part of the fixed cost, regardless of if demand drops....
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