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Xenbe manufactures plastic bottles . The have four operating machines in the factory that operate at 80% capacity. One machine can produce 10 000 plastic
Xenbe manufactures plastic bottles . The have four operating machines in the factory that operate at 80% capacity. One machine can produce 10 000 plastic bottles per month at full capacity. There are four weeks in a month and all bottles are sold in the month of manufacture. Bottles are sold at R5 each.
The following costs are incurred on a monthly basis in the manufacturing of plastic bottles.
- Plastic purchased per week. R8 000.
- Wages of machine operators R2 000 per week. There are four operators on duty at any time.
- Monthly salary of factory supervisor R20 000.
- Depreciation of machines R6 000 per machine per annum.
- Water and electricity of R12 000 per month. Must be apportioned according to floor space. (Factory takes up 80% of total floor space).
a) Calculate the variable cost per unit manufactured and the fixed cost per month.
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