Mertz,Inc,Has Done a Cost Analysis for Its Production of Flags

question 89

Essay

Mertz,Inc.,has done a cost analysis for its production of flags.The following activities and cost drivers have been developed:
$$\begin{array} { l l } \text { Activity } & \text { Cost Farmula } \\\hline \text { Maintenance } & \$ 13,000 + \$ 2 \text { per machine hour} \\\text { Machining } & \$ 45,000 + \$ 6 \text { per machine hour } \\\text { Inspection } & \$ 70,000 + \$ 500 \text { per batch } \\\text { Setups } & \$ 2,000 \text { per batch } \\\text { Purchasing } & \$ 80,000 + \$ 150 \text { per purchase order }\end{array}$$ Following are the actual costs of producing 75,000 flags:
1,000 machine hours; 15 batches; 10 purchase orders
$\begin{array}{lr}\text { Maintenance } & \$ 14,000 \\\text { Machining } & 50,000 \\\text { Inspection } & 70,000 \\\text { Setups } & 32,000 \\\text { Purchasing } & 82,000\end{array}$ Prepare an activity-based performance report.

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Definitions:

Sufficient Consideration

The value that is deemed adequate by the parties involved and law as part of an agreement or contract, ensuring it is binding and enforceable.

CISG

The United Nations Convention on Contracts for the International Sale of Goods, a treaty that provides a uniform international sales law.

Consideration

Something of value exchanged between parties in a contract that is necessary for the agreement to be legally binding, such as money, services, or promises.

UCC

Short for Uniform Commercial Code, it is a set of laws that provide legal framework for commercial transactions in the United States.