The Bragg & Stratton Company manufactures a specialized motor for chain saws. The company expects to manufacture and sell 30,000 motors in the year 2010. It can manufacture an additional 10,000 motors without adding new machinery and equipment. Bragg & Stratton's projected total costs for the 30,000 units are given in Table P8.5.
TABLE P8.5
Direct materials............................... $150,000
Direct labor.................................... 300,000
Manufacturing overhead:
Variable portion............................... 100,000
Fixed portion.................................. 80,000
Selling and administrative costs:
Variable portion............................... 180,000
Fixed portion.................................. 70,000
The selling price for the motor is $80.
(a) What is the total manufacturing cost per unit if 30,000 motors are produced?
(b) What is the total manufacturing cost per unit if 40,000 motors are produced?
(c) What is the break-even price on the motors?