Question
The following information relates to a company with a relevant range of activity from 2,000 to 8,000 units. They are currently producing and selling 4,000
The following information relates to a company with a relevant range of activity from 2,000 to 8,000 units. They are currently producing and selling 4,000 units.
The average cost per unit is $6.80 for direct materials; $3.50 for direct labor; and $1.60 for variable manufacturing overhead.
The average fixed cost per unit is $4.00 for fixed manufacturing overhead; $.75 for fixed selling expenses and $.60 for fixed administrative expenses.
Variable selling expenses are $0.50 per unit and variable administrative expenses are $ 0.50 per unit.
Required: (For questions a. - d. assume that 5,000 units are produced and sold.)
a. Calculate the variable cost per unit sold. (Round "Per unit" answer to 2 decimal places.)
b. Calculate the total amount of variable cost for the units sold.
c. Calculate the average fixed manufacturing cost per unit produced. (Round "Per unit" answer to 2 decimal places.)
d. Calculate the total amount of fixed manufacturing costs.
e. Calculate the incremental manufacturing cost the company will incur if production increases from 4,000 to 4,001 units. (Round "Per unit" answer to 2 decimal places.)
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