14. unit costs Ralph manufactures two products. Total manufacturing cost (TMC)

is described by an LLA of TMC = 40, 000 + 10q1 + 5q2, where qi denotes units of product i.

(a) Ralph is contemplating two possible production plans. Plan #1 calls for q1 = 2, 500 and q2 = 2, 500 units, while plan #2 calls for q1 = 3, 500 and q2 = 1, 400 units. Determine total manufacturing cost for each plan.

(b) Suppose Ralph employs a unit costing procedure in which the "fixed" cost, the intercept in the LLA, is allocated to the products on the basis of total physical units. Determine the unit cost for each product under both plans.

(c) Conversely, suppose Ralph allocates the intercept component on the basis of relative separable cost incurred. Determine the unit cost for each product under both plans.

(d) Repeat the above, for the cases where plan #1 calls for q1 = 3, 000 and q2 = 1, 000 units, while plan #2 calls for q1 = 1, 000 and q2 = 3, 000 units.

(e) Carefully explain your unit cost results.20