Energetic Treadmills is a medium- sized company that makes three models of treadmills on one large machine. The products share this machine. The machine is run 4,000 hours per year. Other information about the costs for the machine and the products made by Energetic Treadmills are shown in the following table.

REQUIRED:

a. Using the total time used to make the three products, calculate what percentage of the productive time the machine is used to make each product.

b. Cost out the three products using their respective percentage of the total productive time.

c. Now put the costs of running the machines into one of the two cost pools, managed or committed capacity.

d. Calculate the cost per managed hour, per committed hour, and total cost per staffed hour.

e. Calculate the competitive cost of the three products using the staffed hourly rate you calculated in (d).

f. Explain as precisely as possible the differences in the estimated costs of the products.

Transcribed Image Text:

Energetic Treadmills Cost Information about the Machine Depreciation $500,000.00 People $600,000.00 Supplies $250,000.00