1/ Variable Costs:
The variable cost will be 40% higher [ an increase of 21,000 - 15,000=6,000 units]
Direct Material used
Direct material used [ 1,060,000 *1.4]
Unit costs [ 6,335,600 / 21,000] =$ 301.7 Indirect Materials and supplies
Direct Labor [ 1,904,000 * 1.4]
Variable Cost/ Unit = 228.27 at both 15k & 21k units Power to run plant eqip
Indirect Materials and supplies [247,000 * 1.4]
Total Variable Cost @ 15k units = Fixed Cost:
Power to run plant eqip [ 213,000 *1.4]
1,060,000+1,904,000 + 247,000+ 213,000 = 3,424,000 Supervisory salaries
Total Variable Cost
Unit Variable Cost = 3,424,000/15k units or Plant Utilities
4,793,600/21k units = $228.27/unit Depreciation on P&P(S-L, time basic)
926,000 Property tax on building
281,000 Required: Unit Variable Cost and total fixed costs
Depreciation on P&P(S-L, time basic)
141,000 are expected to remain unchanged next month.
Property tax on building
194,000 Calculate unit cost and total cost if 21,000 units
Total Fixed Costs
1,542,000 are produced next month.
Total Cost for 21,000 units
2/ The Dollar Store’s cost structure is dominated by variable costs with
a contribution margin ratio of 0.45 and fixed costs of $119,700. Every
cost structure of a competitor, One-Mart, is dominated by fixed costs
. with a higher contribution margin ratio of 0.80 and fixed costs of $319,200.
Both companies have sales of $570,000 for the month.
Compare the two companies’ cost structures...
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