Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher

Exercise 32

Resources Used versus Resources Supplied

Gundy Press reports the following information about resources:

	Cost Driver Rate	Cost Driver Volume
Resources used
Setups&	$ 125 per run	175 runs
Clerical &	15 per page	500 pages typed
Resources supplied
Setups&	$22,500
Clerical&	10,000

Required

Compute unused setup and clerical resource capacity for Gundy Press.

Step 1 of 4

Cost accounting system

This is a system designed for inhouse or internal managers and their decision making. Cost accounting information is not needed for comparison with other companies. This information is commonly used in financial accounting also, but it is primarily used by company managers for their decision making. It is important that cost accounting information is relevant for the decision making of the manager.

Unused resource capacity

This is difference of resources supplied and resources used. Information about unused resource capacity is very important for cost management. It helps managers to explore the options of saving costs by improving and changing the production process.