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Sprinkleville Candies manufactures jawbreaker candies in a fully automated process. The machine that produces candies was purchased recently and can make 4,400 jawbreakers per month.
Sprinkleville Candies manufactures jawbreaker candies in a fully automated process. The machine that produces candies was purchased recently and can make 4,400 jawbreakers per month. The machine costs $6,000 and is depreciated using straight-line depreciation over 10 years assuming zero residual value. Rent for the factory space and warehouse and other fixed manufacturing overhead costs total $500 per month. Sprinkleville currently makes and sells 3,200 jawbreakers per month. Sprinkleville buys just enough materials each month to make the jawbreakers it needs to sell. Materials cost $0.20 per jawbreaker. Next year Sprinkleville expects demand to increase by 100%. At this volume of materials purchased, it will get a 10% discount on price. Rent and other fixed manufacturing overhead costs will remain the same. Read the requirements. Requirements Requirement 1. What is Sprin 1. What is Sprinkleville's current annual relevant range of output? 2. What is Sprinkleville's current annual fixed manufacturing cost within the relevant range? What is the annual variable manufacturing cost? 3. What will Sprinkleville's relevant range of output be next year? How if at all, will total annual fixed and variable manufacturing costs change next year? manufacturing cost? Assume that if it needs to Sprinkleville could buy an identical machine at the same cost as the one it already has
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