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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

Factory rent (Fixed)

Tk 90,000

90000

90000

90000

Total Costs

Tk 12,02,000

Cost per unit:

Material

85

Factory rent

9

9

9

9

Total cost per unit (material & factory rent)

94

Requirements:

  1. Find out the missing figures assuming that the given maintenance cost is Tk 25 per unit produced plus Tk 12,000 fixed per month
  2. 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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