Question
Shingle Enterprises is considering manufacturing a new product. It projects the cost of direct materials and rent for a range of output as shown below.
Shingle Enterprises is considering manufacturing a new product. It projects the cost of direct materials and rent for a range of output as shown below.
Output in Units | Rent Expense | Direct Materials |
---|---|---|
1,000 | 7,100 | 5,680 |
2,000 | 7,100 | 10,224 |
3,000 | 11,360 | 6,000 |
4,000 | 11,360 | 8,000 |
5,000 | 11,360 | 10,000 |
6,000 | 11,360 | 12,000 |
7,000 | 11,360 | 14,000 |
8,000 | 11,360 | 16,000 |
9,000 | 14,200 | 41,606 |
10,000 | 14,200 | 49,700 |
11,000 | 14,200 | 62,480 |
1. Determine the relevant range of activity for this product.
2. Calculate the variable cost per unit within the relevant range.
3. Indicate the fixed cost within the relevant range.
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Managerial Accounting Tools for business decision making
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
6th Edition
978-0470477144, 1118096894, 9781118214657, 470477148, 111821465X, 978-1118096895
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