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Sweetum Candies manufactures jawbreaker candies in a fully automated process. The machine that produces candies was purchased recently and can make 4,600 jawbreakers per
Sweetum Candies manufactures jawbreaker candies in a fully automated process. The machine that produces candies was purchased recently and can make 4,600 jawbreakers per month. The machine costs $9,000 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 $1,400 per month. Sweetum currently makes and sells 3,500 jawbreakers per month. Sweetum buys just enough materials each month to make the jawbreakers it needs to sell. Materials cost $0.40 per jawbreaker. Next year Sweetum 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. Requirement 1. What is Sweetum's current annual relevant range of output? Sweetum's current annual relevant range of output is 0 to 55,200 jawbreakers Requirement 2. What is Sweetum's current annual fixed manufacturing cost within the relevant range? What is the annual variable manufacturing cost? Sweetum's current annual fixed manufacturing costs =
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