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2-32 Total and unit cost, decision making. Gayle's Glassworks makes glass flanges for scientific use. Materials cost $1 per flange, and the glass blowers are paid a wage rate of $28 per hour. A glass blower blows 10 flanges per hour. Fixed manufacturing costs for flanges are $28,000 per period. Period (nonmanu- facturing) costs associated with flanges are $10,000 per period and are fixed. 1. Graph the fixed, variable, and total manufacturing cost for flanges, using units (number of flanges) on the x-axis. 2. Assume Gayle's Glassworks manufactures and sells 5,000 flanges this period. Its competitor, Flora's Flasks, sells flanges for $10 each. Can Gayle sell below Flora's price and still make a profit on the flanges? 3. How would your answer to requirement 2 differ if Gayle's Glassworks made and sold 10,000 flanges this period? Why? What does this indicate about the use of unit cost in decision making? 2-48 Finding unknown amounts. An auditor for the Internal Revenue Service is trying to reconstruct some partially destroyed records of two taxpayers. For each of the cases in the accompanying list, find the unknowns designated by the letters A and B for Case 1 and C and D for Case 2. Accounts receivable, 12/31 Cost of goods sold Accounts payable, 1/1 Accounts payable, 12/31 Finished-goods inventory, 12/31 Gross margin Work-in-process inventory, 1/1 Work-in-process inventory, 12/31 Finished-goods inventory, 1/1 Direct materials used Direct manufacturing labor Manufacturing overhead costs Purchases of direct materials Revenues Accounts receivable, 1/1 Case 1 Case 2 (in thousands) $ 8,000 $3,150 A 31,800 4,500 2,550 2,700 2,250 . 7,000 18,000 3,000 1,500 0 4,700 5,000 7,000 13,000 19,000 4,500 8,500 9,500 D 13,500 10,500 52,000 52,300 3,000 2,100