Demers Products reports the following information about resources. At the beginn

Question

Demers Products reports the following information about resources. At the beginning of the year, Demers estimated it would spend $84,000 for setups and $41,000 for quality testing. 1.Compute unused resource capacity for setups for Demers Products. 2. Compute unused resource capacity for quality testing for Demers Products.

                          Cost Driver                         Rate          Volume Resources used:      Setups               $250/run          350 runs      Clerical               $40          900 tests Resources supplied:      Setups $90,000      Clerical $40,000

Explanation / Answer

Hi,

Please find the answer as follows:

Unused resource capacity for setups for Demers Products = 90000 - 250*350 = 2500

Unused resource capacity for quality testing for Demers Products = 40000 - 90*400 = 4000

Thanks.

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