At Gems in the Rough, a jewelry company, the engraving department is a bottleneck. The company is considering hiring an extra worker, whose salary will be $56,000 per year, to ease the problem. Using the extra worker, the company will be able to engrave 8,000 more units per year. The selling price per unit is $16.00. The cost per unit currently is $11.70 as shown: Direct material $4.50 Direct labor 2.05 Variable overhead 1.40 Fixed overhead (primarily depreciation of equipment) 3.75 Total $11.70 What is the annual financial impact of hiring the extra worker for the bottleneck process?
At Gems in the Rough, a jewelry company, the engraving department is a bottleneck. The company is considering hiring an extra worker, whose salary will be $56,000 per year, to ease the problem. Using the extra worker, the company will be able to engrave 8,000 more units per year. The selling price per unit is $16.00. The cost per unit currently is $11.70 as shown: Direct material $4.50 Direct labor 2.05 Variable overhead 1.40 Fixed overhead (primarily depreciation of equipment) 3.75 Total $11.70 What is the annual financial impact of hiring the extra worker for the bottleneck process?
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 12PA: Ac Gems in the Rough, a jewelry company, the engraving department is a bottleneck. The company is...
Related questions
Question
At Gems in the Rough, a jewelry company, the engraving department is a bottleneck. The company is considering hiring an extra worker, whose salary will be $56,000 per year, to ease the problem. Using the extra worker, the company will be able to engrave 8,000 more units per year. The selling price per unit is $16.00. The cost per unit currently is $11.70 as shown:
Direct material | $4.50 |
Direct labor | 2.05 |
Variable |
1.40 |
Fixed overhead (primarily depreciation of equipment) | 3.75 |
Total | $11.70 |
What is the annual financial impact of hiring the extra worker for the bottleneck process?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning