Middle Industries produces a sensor for use in manufacturing. It produces the sensor in a plant with an annual practical capacity of 75,000 units. The variable cost of the sensor is $185.00 per unit, and the fixed costs of the plant are $12,375,000 annually. Current annual demand is 55,000 sensors. Middle Industries bought the plant because it was close to its other manufacturing facilities and was available for sale when they were searching for a location.Required:What cost per sensor should the cost system report to facilitate management decision making?What is the cost of excess capacity?What cost per sensor would the cost system report if the smallest manufacturing plant that could be built was able to produce 75,000 sensors? What would be the cost of excess capacity? What is the cost of excess capacity?Cost of excess capacity Req AReq BReq CWhat cost per sensor should the cost system report to facilitate management decision making?Cost per sensor

A cost accounting system refers to the method or approach used by businesses to determine and track…

Answered: Middle Industries produces a sensor for…

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter6: Process Cost Accounting—additional Procedures; Accounting For Joint Products And By-products

Section: Chapter Questions

Problem 13Q: What advantage does the FIFO cost method have over the average cost method relative to providing...

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Required:

What cost per sensor should the cost system report to facilitate management decision making?
What is the cost of excess capacity?
What cost per sensor would the cost system report if the smallest manufacturing plant that could be built was able to produce 75,000 sensors? What would be the cost of excess capacity?

What is the cost of excess capacity?
Cost of excess capacity

Req A
Req B
Req C
What cost per sensor should the cost system report to facilitate management decision making?
Cost per sensor

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