Question
Greek Manufacturing Company produces and sells a line of product that are sold usually all year round. The company has a maximum production capacity of
Greek Manufacturing Company produces and sells a line of product that are sold usually all year round. The company has a maximum production capacity of 100,000 units per year. Operating at normal capacity, the business earned Operating Income of $600,000 in 2020. The following cost data has been prepared for the year ended December 31, 2020. Selling price per unit $50.00 Production Costs: Direct Materials . $10.00 Direct Labour . $8.00 Variable Manufacturing Overhead . $7.00 Fixed Manufacturing Overhead....................... $450,000 Fixed Selling & Administrative Expenses $300,000 Variable selling expense per unit . $10.00 Required: a) Using the equation method, calculate the normal capacity of the business. (2 marks) b) Calculate: i) the variable production cost per unit ii) the total production cost per unit iii) The total variable cost per unit iv) Total Fixed Costs
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