Question

Vogel Inc. manufactures memory chips for electronic toys within a relevant range of 25,000 to 100,000 memory chips per year. Within this range, the following partially completed manufacturing cost schedule has been prepared: Memory Chips Produced 40,000 60,000 90,000 Total Variable Costs $1,400,000 D J Total Fixed Costs 800,000 E K Total Costs $2,200,000 F L Variable Costs per Unit A G M Fixed Cost Per Unit B H N Total Cost per Unit C I O Find the missing amounts for A-O A. ______________ B. ______________ C. ______________ D. ______________ E. ______________ F. ______________ G. ______________ H. ______________ I. _______________ J. ________________ K. _______________ L. _________________ M. _________________ N. _____________________ O. __________________

Answer 1

Answer and Explanation:

The computation of the missing amount is as follows

Components produced     40,000        60,000       90,000

Total cost

Total variable cost             $1,400,000  $2,100,000 $3,150,000

                                                       (60,000 × $35)    (90,000 × $35)

Total fixed cost                  $800,000    $800,000   $800,000

Total cost                           $2,200,000  $2,900,000 $3,950,000

Cost per unit

Variable cost per unit        $35               $35           $35

                              ($1,400,000 ÷ 40,000)  

Fixed cost per unit           $20               $13.33        $8.89

($800,000 ÷ 40,000) ($800,000 ÷ 60,000) ($800,000 ÷ 90,000)

Total cost per unit           $55               $46.33        $43.89

The total cost per unit come from

= Variable cost per unit + fixed cost per unit