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XYZ Manufacturing produces custom machinery. Calculate the direct costs, fixed costs, variable costs, and total operating costs for the production of 100 units of a

  1. XYZ Manufacturing produces custom machinery. Calculate the direct costs, fixed costs, variable costs, and total operating costs for the production of 100 units of a new machine based on the following data:
    • Direct materials: $50,000
    • Direct labor: $30,000
    • Factory rent (fixed): $10,000 per month
    • Utilities (variable): $500 per month plus $5 per unit
    • Depreciation (fixed): $20,000 annually
    • Other operating expenses (variable): $2,000 plus $10 per unit

Requirements:

  • Break down the direct, fixed, and variable costs for producing 100 units in a table format.
  • Calculate the total operating costs for producing 100 units.
  • Discuss how XYZ Manufacturing can reduce its variable costs.
  • Analyze the impact of increasing production to 200 units on total operating costs.
  • Recommend cost-saving strategies to optimize XYZ Manufacturing's cost structure.

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