Regal Toys Corp. produces a board game, a paint-by-number set, and a jigsaw puzzle. Production and sales information is as follows:

		Board Game		Paint-By-Number		Jigsaw Puzzle
Units produced and sold		10,000 units		5,000 units		2,500 units
Sales price per unit		$10.00		$19.00		$9.00
Direct materials per unit		$4.05		$5.80		$1.75
Direct labor per unit		$1.20		$1.60		$0.90
Machine hours per unit		1 MH		3 MH		2 MH

Regal Toys incurred $96,000 in fixed manufacturing overhead, which is applied based on the practical capacity of machine hours. Regal Toys also incurred $0.40/machine hour in variable manufacturing overhead. Regal Toys has a practical capacity of 40,000 machine hours.

Determine the total amount of excess capacity costs.

Answer rating: 100% (QA)

Regal Toys Workings Amount Note Fixed manufacturing ov... View the full answer