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Chataqua Can Company manufactures metal cans used in the food-processing industry. A case of cans sells for $30. The variable costs of production for
Chataqua Can Company manufactures metal cans used in the food-processing industry. A case of cans sells for $30. The variable costs of production for one case of cans are as follows: Direct material Direct labor Variable manufacturing overhead Total variable manufacturing cost per case $ 7.00 2.00 6.50 $15.50 Variable selling and administrative costs amount to $0.90 per case. Budgeted fixed manufacturing overhead is $540,000 per year, and fixed selling and administrative cost is $45,500 per year. The following data pertain to the company's first three years of operation. Year 1 Year 2 Year 3 Planned production (in units) 90,000 90,000 90,000 Finished-goods inventory (in units), January 1 Actual production (in units) 0 0 28,000 90,000 90,000 90,000 Sales (in units) 90,000 62,000 104,000 Finished-goods inventory (in units), December 31 0 28,000 14,000
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