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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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
Transcribed Image Text:Cairney, Incorporated manufactures a specialized part used in internal combustion engines. The annual demand for the part is
249,000 units. The facility has a practical capacity of 264,000 units annually. The company leased the current facility because facilities
capable of manufacturing the unit require machines that can produce 66,000 units each. The annual cost of the facility is $1,013,760.
The variable cost of a part is $4.
Required:
a. What cost per unit should the cost system report to facilitate management decision making?
Note: Round your answer to 2 decimal places.
b. What is the cost of excess capacity?
a. Cost per unit
b. Cost of excess capacity
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