Question

This Question: 1 pt 3 of 3 (3 complete) This Quiz: 3 pts possible Gabrielle's Glassworks makes glass flanges for scientific use. Materials cost $3 per flange, and the glass blowers are paid a wage rate of $22 per hour. A glass blower blows 10 flanges per hour. Fixed manufacturing costs for flanges are $22,000 per period. Period (nonmanufacturing) costs associated with flanges are $12,000 per period and are fixed. Read the requirements. Requirement 1. Select the graph that shows fixed, variable, and total manufacturing cost for flanges, using units (number of flanges) on the x-axis. (Enlarge each graph before selecting your answer.) OC. ОА. 100.0001 OB. 100,000+ OD. 100.0001 100,000 Variable costs Total costs O 08 Toyal costs Valable costs Cost Cost Cost Cost Cost Fixed costs Fixed costs Fixed costs Total costs Fixed costs Variable costs OTTIMAL Total costs 0- D.09.06.02 Doop.60.000 Number of flanges Variable costs OKTIT 2.09.06 02 Dop.60.000 Number of flanges 2.09.06 02 Dop.60.000 Number of flanges 5,09,06,02 ODOOD.000.000 Number of flanges Requirement 2. Assume Gabrielle's Glassworks manufactures and sells 4,000 flanges this period. Their competitor, Faina's Flasks, sells flanges for $9.80 each. Can Gabrielle sell below Faina's price and still make a profit on the flanges? (Round the total cost per unit to two decimal places.) Begin by determining the formula used to calculate the total cost per unit. ( Total fixed costs + Total variable costs ) / Units produced and sold v = Total cost per unit ; therefore, they sell below The total cost per unit when manufacturing 4,000 flanges is $ Faina's price and still make a profit Requirement 3. How would your answer to requirement 2 differ if Gabrielle's Glassworks made and sold 8,000 flanges this period? Why? What does this indicate about the use of unit cost in decision making? (Round the total cost per unit to two decimal places.) The total cost per unit when manufacturing 8,000 flanges would be $ With production and sales at this level, the company V make a profit if the selling price is below $9.80 each. Managers must be cautious using unit costs for decision making because V remain the same regardless of the number of units produced. Choose from any list or enter any number in the input fields and then continue to the next question.

Answer 1

Ans.

1.

Graph that shows fixed, variable and total manufacturing costs for flanges using units on the X-axis is Graph B.

2.

Total cost per unit = Materials cost per unit + (Wage rate per hour/No. of units per hour) = $3+($ 22/10)=$ 3+$2.2 = $5.2

Total variable costs = Total cost per unit * Units produced and sold = $5.2 * 4000 = $ 20,800

Total fixed costs = Fixed manufacturing costs+Period costs = $ 22,000 + $ 12,000 = $ 34,000

Total cost per unit = (Total fixed costs+Total variable costs) /Units produced and sold

Total cost per unit =( $ 34,000 + $ 20,800 ) / 4,000 = $ 13.7

The total cost per unit when manufacturing 4,000 flanges is $ 13.7 ,therefore they cannot sell below Faina's price and still make profit.

3.

Total variable costs = Total cost per unit * Units produced and sold = 5.2 * 8000 = $ 41,600

Total fixed costs = Fixed manufacturing costs+Period costs = $ 22,000 + $ 12,000 = $ 34,000

Total cost per unit = (Total fixed costs+Total variable costs) /Units produced and sold

Total cost per unit =( $ 34,000 + $ 41,600 ) / 8,000 = $ 9.45

The total cost per unit when manufacturing 8,000 flanges would be $ 9.45

With production and sale at this level , the company could make a profit if selling price is below $ 9.8 each. Managers must be cautious using unit cost for decision making because the fixed cost remain the same regardless the number of units produced.