Rogers Manufacturing makes ball bearings that are used in several industries. The ball bearings are sold with lubricant so they are ready to install. Each set sells for $50. The following is Rogers’ cost for making one unit of the ball bearings:

REQUIRED:

a. Using the above data, derive the cost formula for Rogers Manufacturing. Be careful here to derive the formula for one set of ball bearings, not 5,000.

b. Do you question the pattern of any of the costs? Specifically, does anything look variable by number of sets that does not quite seem to make sense? Why?

c. What is Rogers’ breakeven volume in sets of ball bearings?

d. What is Rogers’ breakeven volume in dollar sales of ball bearings?

Transcribed Image Text:

Rogers Manufacturing Cost for 5000 Sets Cost for 10,000 Variability, 5,00- Sets Fixed Portion for 5,000 Sets Resource 10,000 Seis Labor $25,000 $50,000 Materials $115,000 $230,000 Packing $7,500 $15,000 Office workers $4,000 $4,000 Telephones $300 $300