Question

Bubbly Soda spends 52 on direct materials, direct labor, and variable manufacturing overhead for every unit (12-pack of soda) it produces Fored manufacturing overhead costs $7 million per year. The plant, which is currently operating at only 75% of capacity, produced 25 milion units this year. Management plans to operate closer to full capacity next year, producing 35 m on units Management doesn't anticipate any changes in the prices pays for materials, labor, and manufacturing overhead Read the requirements Requirement 1. What is the current total product cost for the 25 milion units, induding foxed and variable costs? Determine the formula, then calculate the current lotal product cost for the 25 million units), including food and variable costs Total fed costs = Total variable costs million Total product costs million + million

Answer 1

The cuneat total Prodact cost (25 mi lven units) including fixed and Variable cost isin - Vortable cost - Variable (ost perunit X 25miliem units =$2 x 25 millionunits $50milliom %3D FIxed cost-97 millien. - The cusrent total pruduct cost- mlnt =$50 milliont $7 mi llien 557milion. OThe curont Average paduct cest pes unit $57 million 25milion nite -$2.28peh unit O The current Fixed cast Per unit 7mi/lien 25milllan unite = $ 0.28 per unit The foe casted total product cost pex stear (for 35 mill,as cnite) in clasing fixed ond Va2b ७ is: Variable cost -32X3semillion onits $70millions. 11 Fixed cost =$7 milliòn The for casted total Poduet cost hex year $70millions +$7 millier =$77 millions

5The Fase casted average product cast next Year- $77 millionr 35 milims umits O $ 2.20per unit o fove casted Fired cost $7millsons 35 millions conets =$0.2 per anit r unit per ) The average Poduet cost deereases as increases be cause the frced remain some even Produchon increases f lead to average Au duct cost decrearei. prodaction