Potter Production incurred $60,000 variable costs and $140,000 fixed costs last month and produced 7,500 units. The selling price is $60 per unit. Potter plans to produce 9,000 units this month and has asked you to estimate total cost for the month. What would you estimate to be the total cost?
What is the process to solve this?
Variable cost change in proportion to the volume of production. While fixed costs remain fixed irrespective of production volume. So, first we will calculate the per unit variable cost as per below:
Variable cost per unit = Total variable cost / Total number of units
Variable cost per unit = $60000 / 7500 = $8
Now,
Total variable cost for 9000 units = 9000 * $8 = $72000
Fixed cost = $140000
Total cost of 9000 units = Total variable cost of 9000 units + Fixed cost
Total cost = $72000 + $140000 = $212000
Potter Production incurred $60,000 variable costs and $140,000 fixed costs last month and produced 7,500 units....
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8) If 12,500 units are produced, what is the average fixed
manufacturing cost per unit produced?
9) If 8,000 units are produced, what is the
total amount of fixed manufacturing cost incurred to support this
level of production?
10) If 12,500 units are produced, what is the total
amount of fixed manufacturing cost incurred to support this level
of production?
11) If 8,000 units are produced, what is the total
amount of manufacturing overhead cost incurred to support this
level of production? What...
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