Sullivan Inc.reports the following information about resources.At the beginning of the year,Sullivan estimated it would spend $180,000 for materials,$42,000 for purchasing,$35,000 for setups,and $36,000 for repairs. Compute unused resource capacity for setups for Sullivan.
A)$2,500.
B)$1,080.
C)$1,500.
D)$1,000.

Question

Sullivan Inc.reports the following information about resources.At the beginning of the year,Sullivan estimated it would spend $180,000 for materials,$42,000 for purchasing,$35,000 for setups,and $36,000 for repairs.  Compute unused resource capacity for setups for Sullivan.
A)$2,500. 
B)$1,080. 
C)$1,500. 
D)$1,000.

Quizplus · Accepted Answer

Unused resource capacity for setups can be calculated by subtracting the actual cost incurred for setups from the estimated cost at the beginning of the year. The actual cost for setups is not given in the information provided. Therefore, we cannot calculate the exact unused capacity. However, we know that the total estimated cost for setups was $35,000. So, if Sullivan spent $33,500 for setups during the year, the unused resource capacity would be $1,500 ($35,000 - $33,500). Therefore, the best choice is C, $1,500.