ine Office Products produces three different paper products at its Vaasa lumber plant: Supreme, Deluxe, and Regular. Each product has its own dedicated production line at the plant. It currently uses the lowing three-part classification for its manufacturing costs: direct materials, direct manufacturing labor, and manufacturing overhead costs. Total manufacturing overhead costs of the plant in July 2020 are 60 million ($24 million of which are fixed). This total amount is allocated to each product line on the basis of the direct manufacturing labor costs of each line. Summary data (in millions) for July 2020 are as (Click the icon to view the data.) lows: ead the requirements Requirement 1. Compute the manufacturing cost per unit for each product produced in July 2020. Begin by determining the formula needed to calculate the total manufacturing cost per unit. Total manufacturing costs Units produced Total manufacturing cost per unit Using the formula you determined above, calculate the company's total manufacturing cost per unit for each type of product produced in July 2020. (Round your answers to the nearest cent.) Supreme Deluxe Regular Total manufacturing cost per unit produced in July 5 1.44 S 1.11 $ 1.17 Requirement 2. Suppose that, in August 2020, production was 140 million units of Supreme, 180 million units of Deluxe, and 200 million units of Regular. Why might the July 2020 information on manufacturing cost per unit be misleading when predicting total manufacturing costs in August 2020? During July 2020, the company incurred $160 million of manufacturing overhead costs, which includes a volume. This amount, which been allocated to the total manufacturing costs of producing each product, cost component that with changes in monthly production the total manufacturing cost per unit amounts as calculated in requirement 1. Gummy Land Candies manufactures jawbreaker candies in a fully automated process. The machine that produces candies was purchased recently and can make 5.000 jawbreakers per month. The machine costs $6,500 and is depreciated using straight-line depreciation over 10 years assuming zero residual value. Rent for the factory space and warehouse and other fixed manufacturing overhead costs total $1,200 per month. Gummy Land currently makes and sells 3,900 jawbreakers per month, Gummy Land buys just enough materials each month to make the jawbreakers it needs to sell. Materials cost $0.40 per jawbreaker. Next year Gummy Land expects demand to increase by 100%. At this volume of materials purchased, it will get a 10% discount on price. Rent and other fixed manufacturing overhead costs will remain the same Read the requirements Requirement 1. What is Gummy Land's current annual relevant range of output? Gummy Land's current annual relevant range of output is 0 to 60,000 jawbreakers Requirement 2. What is Gummy Land's current annual fixed manufacturing cost within the relevant range? What is the annual variable manufacturing cost? Gummy Land's current annual fixed manufacturing costs- Gummy Land's current annual variable manufacturing costs $15.050 $18,720 Requirement 3. What will Gummy Land's relevant range of output be next year? How if at all, will total annual fixed and variable manufacturing costs change next year? Assume that if it needs to Gummy Land could buy an identical machine at the same cost as the one it already has If the demand increases by 100%, annual production will have to increase to this amount of jawbreakers next year to meet the expected increase Geoffrey's Glassworks makes glass flanges for scientific use. Materials cost $2 per flange, and the glass blowers are paid a wage rate of $21 per hour. A glass blower blows 5 flanges per hour. Fixed manufacturing costs for flanges are $21,000 per period. Period (nonmanufacturing) costs associated with flanges are $11,000 per period and are fixed. Read the requirements costs costs 20400000024000 Number of flanges 20400004000 Number of ange 2.0400000000 Number of flanges ok 2040000000000 Number of fanges Requirement 2. Assume Geoffrey's Glassworks manufactures and sells 5,000 flanges this period. Its competitor, Faith's Flasks, sells flanges for $9.75 each. Can Geoffrey sell below Faith's price and make a profit on the flanges? (Round the total cost per unit to two decimal places.) Begin by determining the formula used to calciate the total cost per unit. Total fixed costs Total variable costs + Units produced and sold Total cost per unit The total cost per unit when manufacturing 5,000 flanges is Faith's price and still make a profit $ 12.60; therefore, they cannot sell below Requirement 3. How would your answer to requirement 2 differ if Geoffrey's Glassworks made and sold 10,000 flanges this period? Why? What does this indicate about the use of unit cost in decision making? (Round the total cost per unit to two decimal places.) The total cost per unit when manufacturing 10,000 flanges would be