48 CHAPTER 2 AN INTRODUCTION TO COST TERMS AND PURPOSES 2. How would your answer to requirement 2 differ if Graham's Glassworks made and sold 10,000 flanges this period? Why? What does this indicate about the use of unit cost in decision making? LO 1,4 2-22 Computing and interpreting manufacturing unit costs. Maximum Office Products (MOP) produces 2. Total fixed costs are $20.00 its own dedicated production line at the plant. MOP currently uses the following three-part classification three different paper products at its Vernon lumber plant-Supreme, Deluxe, and Regular. Each product has for its manufacturing costs: direct materials, direct manufacturing labour, and indirect manufacturing costs. Total indirect manufacturing costs of the plant in May 2018 are $150 million ($20 million of which are fixed). This total amount is allocated to each product line on the basis of direct manufacturing labour costs of each line. Summary data (in millions) for May 2018 are Supreme Deluxe Regular Direct materials cost $ 84 $ 54 Direct manufacturing labour costs 14 28 8 Indirect manufacturing costs 42 84 24 Production 90 kilograms 120 kilograms 100 kilograms $ 62 Required 1. Compute the total manufacturing cost per kilogram for each product produced in May 2018. Compute the total variable manufacturing cost per kilogram for each product produced in May 2018. 2. Suppose that in June 2018, production was 120 million kilograms of Supreme, 160 million kilograms of Deluxe, and 180 million kilograms of Regular. Why might the May 2018 information on total manufactur- ing costs per kilogram be misleading when predicting total manufacturing costs in June 2018? 111 Variable costs and fixed costs. Consolidated Minerals (CM) owns the rights to extract minerals