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Porter Company is a manufacturer of handmade garments. Consider the following costs of the company over the relevant range of 10,000 to 1,00,000 units of
Porter Company is a manufacturer of handmade garments. Consider the following costs of the company over the relevant range of 10,000 to 1,00,000 units of production capacity.
| PRODUCTION UNITS | |||
Costs | 10,000 | 50,000 | 75,000 | 1,00,000 |
Material (Variable)
| Tk 8,50,000 | (85*50000) 4250000 |
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Factory rent (Fixed)
| Tk 90,000 | 90000 | 90000 | 90000 |
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Total Costs | Tk 12,02,000 |
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Cost per unit: |
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Material
| 85 |
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Factory rent
| 9 | 9 | 9 | 9 |
Total cost per unit (material & factory rent) | 94 |
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Requirements:
- Find out the missing figures assuming that the given maintenance cost is Tk 25 per unit produced plus Tk 12,000 fixed per month
- Does the per unit production cost increase, decrease or remain same as the number of units produced in a month increased? Explain.
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