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Assigning Cost of Capacity
(LO 10-5, 6)
Beth's Supplies manufactures building tiles in one plant, which has a practical capacity of 25,000 tiles. The variable cost of the tile is $9.00 per unit, and the fixed costs of the plant are $300,000 annually. Current annual demand is 20,000 tiles. Beth bought the current plant because she expected that demand for the tiles would grow once her reputation was established.
Required
What cost per tile should the cost system report?
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