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merry olde games produces croquet sets the company makes fixed monthly payments to t 736080

Merry Olde Games produces croquet sets. The company makes fixed monthly payments to the local utility based on the previous year’s electrical usage. Any difference between actual and expected usage s paid in January of the year following usage. In February 2010, Merry Olde Games made 2,000 croquet sets and incurred the following costs:

Cardboard boxes (1 per set)

$ 1,000

Mallets (2 per set)

12,000

Croquet balls (6 per set)

9,000

Wire hoops (12 per set, including extras)

3,600

Total hourly wages for production workers

8,400

Supervisor’s salary

2,600

Building and equipment rental

2,800

Utilities

1,300

Total

$40,700

a. What was the per unit cost of each component of a croquet set?

b. What was the total cost of each croquet set?

c. Production for March 2010 is expected to be 2,500 croquet sets. Last November, when 2,500 sets were made, utility cost was $1,400. There have been no rate changes at the local utility companies since that time. What is the estimated cost per set for March?

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