Ocean Motors specializes in producing one specialty vehicle. It is called Surfer and is styled to easily fit multiple surfboards in its back area and top-mounted storage racks.

Ocean View has the following manufacturing costs:

(Click the icon to view the manufacturing costs.)

Plant management costs,

$2,388,000

per year

Cost of leasing equipment,

$2,724,000

per year

Workers' wages,

$600

per Surfer vehicle produced

Direct materials costs: Steel,

$1,300

per Surfer; Tires,

$140

per tire, each Surfer takes 5 tires (one spare)

City license, which is charged monthly based on the number of tires used in production:

0-500 tires	$40,000
501-1,000 tires	$75,000
more than 1,000 tires	$240,000

Ocean View currently produces 170 vehicles per month.

Requirements

1.	What is the variable manufacturing cost per vehicle? What is the fixed manufacturing cost per month?
2.	Plot a graph for the variable manufacturing costs and a second for the fixed manufacturing costs per month. How does the concept of relevant range relate to your graphs? Explain.
3.	What is the total manufacturing cost of each vehicle if 70 vehicles are produced each month? 195 vehicles? How do you explain the difference in the manufacturing cost per unit?