Question

Irvine Door Corporation makes a particular type of door. The labor cost is $120 per door and the material cost is $160 per door. Irvine rents a factory building for $75,000 a month. Irvine plans to produce 24,000 doors annually. In March and April, it made 2,000 and 3,000 doors, respectively.

Required
a. Explain how changes in the cost driver (number of doors made) affect the total amount of fixed rental cost.
b. Explain how changes in the cost driver (number of doors made) affect the fixed rental cost per unit.
c. If the cost objective is to determine the cost per door, is the factory rent a direct or an indirect cost?
d. How much of the factory rent should be allocated to doors produced in March and April?



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  • CreatedFebruary 07, 2014
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