Fizzy-Cola spends $3.00 on direct materials, direct labour, and variable manufacturing overhead for every unit (12-pack of soda) it produces. Fixed manufacturing overhead costs $6 million per year. The plant, which is currently operating at only 65% of capacity, produced 30 million units this year. Management plans to operate closer to full capacity next year, producing 40 million units. Management does not anticipate any changes in the prices it pays for materials, labour, and manufacturing overhead. Requirements Requirements Requirement a. What is the current total product cost (for the 30 million units), including fixed and variable costs? Determine the formula, then calculate the current total product cost. = Total product costs million million million a. What is the current total product cost (for the 30 million units), including fixed and variable costs? b. What is the current average product cost per unit? c. What is the current fixed cost per unit? d. What is the forecasted total product cost next year (for the 40 million units)? e. What is the forecasted average product cost next year? f. What is the forecasted fixed cost per unit? g. Why does the average product cost decrease as production increases? Requirement b. What is the current average product cost per unit? Determine the formula, then calculate the current average product cost per unit. (Round your answer to the nearest cent.) Current average product cost per unit million million = per unit Print Done Requirement c. What is the current fixed cost per unit? Determine the formula, then calculate the current fixed cost per unit. (Round your answer to the nearest cent.) = Current fixed cost per unit million 1 million per unit Requirement d. What is the forecasted total product cost next year (for the 40 million units)? Determine the formula, then calculate the forecasted total product cost next year. Determine the formula, then calculate the forecasted total product cost next year. Forecasted = total product costs million million = million a. What is the current total product cost (for the 30 million units), including fixed and variable costs? b. What is the current average product cost per unit? c. What is the current fixed cost per unit? d. What is the forecasted total product cost next year (for the 40 million units)? e. What is the forecasted average product cost next year? f. What is the forecasted fixed cost per unit? g. Why does the average product cost decrease as production increases? Requirement e. What is the forecasted average product cost next year? Determine the formula, then calculate the forecasted average product cost per unit next year. (Round your answer to the neares Forecasted average = product cost per unit million / million = per unit Print Done Requirement f. What is the forecasted fixed cost per unit? Determine the formula, then calculate the forecasted fixed cost per unit. (Round your answer to the nearest cent.) / Forecasted fixed cost per unit million 1 million per unit Requirement g. Why does the average product cost decrease as production increases? The average product cost decreases as production volume increases because the company is decreases. over 10 million more units. The company will be operating efficiently, so the average cost of making each unit
