United Motors specializes in producing one specialty vehicle. It is called surfr and is styled to easily fit surfboards in its back area and top-mounted storage racks: United has the following manufacture costs: United currently produces 220 vehicles per month. Plant managemnt costs, $2,124,000 per year Costs of leasing equipment: $1,800,000 per year Worker's wages, $800 per Surfer vehicle produced Direct materials costs: Steel, $1,700 per surfer, Tires, $130 per tire, each surfer takes 5 tires (one spare) City license, which is charges monhly based on the number of tires used in production 0-500 tires $20,000 501-1,000 tires $70,000 more then 1,000 tires $170,000 Requirements:

1. What is the variable manufactuirng cost per vehicle? What is the fixed manufacturing cost per month?

2. Plot a graph for the variable manufacturing costs and a second for the fixed manufacturing costs per month. How does the concept of relevant range relate to your graphs? Explain

3. What is the total manufacturing cost of each vehicle if 95 vechiles are produced each month? 220 vechicles. HOw do you explain the difference in the manufacturing cost per unit? Expert Answer