Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

4. (10 points) Lennox Candies manufactures jaw-breaker candies in a fully automated process. The machine that produces candies was purchased recently and can make 3,900

image text in transcribedimage text in transcribed

4. (10 points) Lennox Candies manufactures jaw-breaker candies in a fully automated process. The machine that produces candies was purchased recently and can make 3,900 per month. The machine costs $18,000 and is depreciated using straight line depreciation over 10 years assuming zero residual value. Rent for the factory space and warehouse and other fixed manufacturing overhead costs total $1,300 per month. In January 2021, Lennox Candies makes and sells 1,500 jaw-breakers per month. The company buys just enough materials each month to make the jaw-breakers it needs to sell. Materials cost 10 cents per jawbreaker. In 2022 (when the economy is back), Lennox Candies expects demand to increase by 100%. At this (100% increased) volume, it will get a 30% discount on price when purchasing the materials. Rent and other fixed manufacturing overhead costs will remain the same. a. What is Lennox Candies' current annual relevant range of output? b. What is Lennox Candies' current annual fixed manufacturing cost within the relevant range? What is the annual variable manufacturing cost? (Question 4 continued) c. What will Lennox Candies' relevant range of output be in 2022? How, if at all, will total annual fixed and variable manufacturing costs change in 2022? Assume that, if necessary, Lennox Candies could buy an identical machine at the same cost as the one it already has

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost Accounting For Managerial Planning Decision Making And Control

Authors: Woody Liao, Andrew Schiff, Stacy Kline

6th Edition

1516551702, 9781516551705

More Books

Students also viewed these Accounting questions

Question

What is overfitting? Why is it so important to watch out for?

Answered: 1 week ago

Question

2. What abilities are possible because humans use symbols?

Answered: 1 week ago

Question

1. How are language and thought related?

Answered: 1 week ago

Question

4. How do rules guide verbal communication?

Answered: 1 week ago