Mindy Feldkamp and her two colleagues, Oscar Lopez and Lori Melton, are personal trainers at an upscale health spa/resort in Tampa, Florida

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1. Mindy Feldkamp and her two colleagues, Oscar Lopez and Lori Melton, are personal trainers at an upscale health spa/resort in Tampa, Florida. They want to start a health club that specializes in health plans for people in the 50 + age range. The growing population in this age range and strong consumer interest in the health benefits of physical activity have convinced them they can profitably operate their own club. In addition to many other decisions, they need to determine what type of business organization they want. Oscar believes there are more advantages to the corporate form than a partnership, but he hasn't yet convinced Mindy and Lori. They have come to you, a small business consulting specialist, seeking information and advice regarding the choice of starting a partnership versus a corporation.

a) Prepare a memo (dated May 26, 2009) that describes the advantages and disadvantages of both partnerships and corporations. Advise Mindy, Oscar and Lori regarding which organizational form you believe would better serve their purposes. Make sure to include reasons supporting your advice.

AND SO ON

All Parts 1 to 5


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GAMMA produces over a hundred different types of residential water faucets as its Delta, Florida plant

GAMMA produces over a hundred different types of residential water faucets as its Delta, Florida plant. This plant uses activity–based costing to calculate product costs. The following table summarizes the plant's overhead for the year and the cost drivers

Used for each activity center:
Summary of plant Overhead and Activity Centers
Total cost
(millions Activity center of dollars)
Cost driver Amount of cost Activity cost per unit Driver of cost drive
Materials handling $20.8 Direct materials $130 million $ 0.16
Purchasing 13.8 part numbers 800 $17,250
Set-up labor 6.8 Batches 500 $13,600
Engineering 10.9 Number of products 125 $87,200
Occupancy 16.2 Direct labor $ 90 million $0.18
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Total plant overhead $ 68.5
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One faucet model GAMMA manufactures is Explorer .Its total product cost is as follows:
Direct labor $ 121,700
Direct materials 90,500
Materials handling $ 90,500 $ 0.16 14,480
Purchasing 9 17,250 155,250
Setup ; 8 13,600 108,800
Engineering 1 87,200 87, 200
Occupancy $121,70 0 $0.18 21,906
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Total cost $599,836

Number of units manufactured 12,500
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Product cost per unit $ 47.99
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Required Question:
Calculate the product cost per unit of the Explorer faucet using absorption costing where plant overhead is assigned to products using direct labor dollars.

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