Question

Data for the next 2 questions: "Kim Company's utility bill is $800 per month when there is no production (fixed utility cost per month). When production starts, production of each unit results in $1.00 increase in utility costs. Q5. Compute total utility cost for the production levels of 1000 units, 1500 units, and 2000 units, respectively. Example of answer: 4500, 3000, 2000 Question 6 (5 points) Q6. Compute utility cost per unit at production levels of 1000 units. 1500 units, and 2000 units, respectively. Example of answer: 2.10, 3.00, 4.50 Question 7 (5 points) 07. Rose Manufacturing currently produces 4,000 bicycles per month and has the following per unit data Direct materials $25.00 Direct manufacturing labor $5.00 Variable manufacturing overhead S14.50 Fixed manufacturing overhead S12.50 Total manufacturing costs $7.00 Production capacity is up to 7000 units. Compute total manufacturing cost per unit when 5,000 bicycles are produced Ramniotama

Answer 1

5.

Fixed utilities cost per month = $800

Utility cost per unit = $1

Total utility cost = (Fixed utilities cost per month + Utility cost per unit) x Number of units

	1,000 units	1,500 units	2,000 units
Total utility cost	800 + 1,000 x 1 = $1,800	800 + 1,500 x 1 = $2,300	800 + 2,000 x 1 = $2,800

6.

	1,000 units	1,500 units	2,000 units
Utility cost per unit (Total utility cost/Number of units)	1,800/1,000 = $1.8	2,300/1,500 = $1.53	2,800/2,000 = $1.4

7.

Fixed manufacturing overhead per unit when 4,000 bicycle are produced = $12.50

Total fixed manufacturing overhead at 4,000 bicycle = 4,000 x 12.50

= $50,000

Total fixed manufacturing overhead will not change due to change in output. Hence, when output is increased to 5,000 bicycle, total fixed manufacturing overhead will remain $50,000.

Variable cost per unit will remain same even due to increase in output.

Direct material	25
Direct manufacturing labor	5
Variable manufacturing overhead	14.50
Fixed manufacturing overhead (50,000.5,000)	10
Total manufacturing cost	$54.50

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