Question
Mikes Radiator Services specializes in the repair and replacement of radiators for passenger vehicles. Variable and fixed costs related to installation activities for the most
Mikes Radiator Services specializes in the repair and replacement of radiators for passenger vehicles. Variable and fixed costs related to installation activities for the most recent month (January) are listed below:
Item | |||
Number of radiators replaced | 100 | ||
Variable expenses: | |||
Direct materials (new radiators) | $ | 50,000 | |
Direct labour (2 hours per installation) | 5,000 | ||
Indirect materials | 500 | ||
Fixed expenses: | |||
Installation supervisors wages | $ | 8,000 | |
Equipment depreciation | 1,000 | ||
Insurance and utilities for garage | 700 | ||
Required:
1. Calculate the per unit amounts for each of the variable expense and fixed expense items in January.
2. Mike expects that 80 radiators will be installed in February and that this level of activity is within the relevant range for all variable and fixed expenses.
a & b-1. Calculate the total expense and per unit amounts for each of the variable and fixed cost items above. (Round "per unit" answers to 2 decimal places.)
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