Question

Relevant Range and Fixed and Variable Costs 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 ...............45,000 60,000 75,000

Total costs:
Total variable costs ................. $1,350,000 (D) (J)
Total fixed costs .................... 810,000 (E) (K)
Total costs .......................... $2,160,000 (F) (L)
Cost per unit:
Variable cost per unit ............... (A) (G) (M)
Fixed cost per unit .................. (B) (H) (N)
Total cost per unit .................. (C) (I) (O)

Required:
Complete the cost schedule. When computing the cost per unit, round to two decimal places.

Answer 1

Answer:

Results are below.

Explanation:

Relevant range= 25,000 to 100,000

In this range, fixed and variable (unitary) costs remain constant.

To calculate the unitary values, we need to use the following formulas:

Variable cost per unit= Total variable cost / Total number of units

Fixed cost per unit= Total fixed cost / total number of units

Memory chips produced= 45,000

Total variable cost= $1,350,000

Total fixed cost= 810,000

Variable cost per unit= 1,350,000 / 45,000= $30

Fixed cost per unit= 810,000 / 45,000= $18

Total cost per unit= 30 + 18= $48

Memory chips produced= 60,000

Total variable cost= 30*60,000= $1,800,000

Total fixed cost= 810,000

Total cost= $2,610,000

Variable cost per unit= $30

Fixed cost per unit= 810,000 / 60,000= $13.5

Total cost per unit= 30 + 13.5= $43.5

Memory chips produced= 75,000

Total variable cost= 30*75,000= $2,250,000

Total fixed cost= 810,000

Total cost= $3,060,000

Variable cost per unit= $30

Fixed cost per unit= 810,000 / 75,000= $10.8

Total cost per unit= 30 + 10.8= $40.8