Creating and Using a Cost Formula Kleenaire Motors manufactures hybrid sports utility vehicles (SUVS). Kleenaire incurs monthly depreciation costs of $10,000,000 on its highly automated plant machinery and warehousing facility. Also, each SUV requires materials and manufacturing overhead resources. On average, the company uses 75,000,000 pounds of steel to manufacture 50,000 SUVS per month. Each pound of steel costs $0.20. In addition, manufacturing overhead resources are driven by machine hours. On average, the company incurs $200,000,000 of variable manufacturing overhead resources to produce 50,000 SuVs per month. Required: 1. Create a formula for the monthly cost of SUVS for Kleenaire. Fixed cost (Variable rate x Number of SUVS) Total Cost of SUVS ($ Number of SUVS) Total Cost of SUVS = 2. If Kleenaire expects to manufacture 55,000 SUVS next month, what is the expected fixed cost (assuming that 55,000 units is within the company's current relevant range)? What is the total variable cost (assuming that 55,000 units is within the company's current relevant range)? What is the total manufacturing cost (i.e., both fixed and variable) (assuming that 55,000 units is within the company's current relevant range)? Feedback Check My Work 1. Total cost includes fixed and variable components. Calculate a material cost per unit and an overhead cost per unit. Add these two rates for a total variable rate. 2. Fixed costs remain constant with no influence by the production activity within the relevant range. 3. Multiply the total variable rate by the units produced in the month. 4. Add the monthly fixed cost and total variable cost for the number of units produced in the month