Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The Gym Company produces weights in different sizes and sells them to gym equipment distribution companies who in turn sell them to various gyms such
The Gym Company produces weights in different sizes and sells them to gym equipment distribution companies who in turn sell them to various gyms such as Boston Sports Club or Gold's Gym. The manufacturing plant occupies 75% of the total buildings and grounds. Approximately 80% of the utilities are for the manufacturing plant. External vendors provide all of the materials and supplies. The sales force is paid entirely on commissions. Advertising spending is set by contract at beginning of the year. At full capacity, the plant is capable of producing 500,000 units per year, but 2006 production volumes are below this maximum capacity level. Total 2006 Product Cost per unit was $3.10, $0.60 of which was variable. Information on their 2006 costs and related inventory balances are listed in the table below. 1-Jan- 2006 31-Dec- 2006 Du ring the Year Raw materials . $60,000 $20,000 Inventory Work-in-process 72,000 88,000 inventory Finished goods 40,000 50,000 inventory Total manufacturing 1,310,250 costs Goods available for 1,334,250 sale Cost of goods sold 1,284,250 Purchases of raw . 164,500 materials Non factory Marketing salaries 236,500 administrative 235,000 salaries Factory maintenance staff 154,000 IIBDBDDII IIBDBDDII jllIlIIIIII calarinc maintenance staff 154,000 salaries Direct labor ?? ? Building rental 250,000 Advertising 148,000 Utilities (Electricity, 120,000 water, phone...) Indirect labor 110,000 Sales commissions 98,400 5% of sales) Factory equipment 490,250 depreciation The company anticipates 2007 production volumes to increase by 10% over 2006. If total fixed costs and the variable product cost per unit in 2006 remain the same in 2007, what are the anticipated total manufacturing costs to be incurred and the anticipated total unit production volume in 2007? a) $1,319,300 & 459,250 O b) $1,325,300 & 469,250 O c) $1,294,750 & 417,500 O d) $1,276,350,& 418,500 O e) $1,319,600 & 459,750
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started