Accurate Metal Company sold 39,000 units of its product at a price of $390 per unit. Total variable cost per unit is $196, consi
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Answer:
Explanation:
There are 2 ways in which this question can be solved:
Method 1 find all the unit cost of production add them together and multiply by the unit to be produced.
Method 2: break down each component of production and multily each by the unit to be produced.
However the method to be used depends on the nature of the question if it’s a multiple choice question Method A is faster and should be applied while if it’s a theory question Method 2 is to be applied since marks would be awarded at each point of calculation.
Note that Total Revenue is calculated the same way Price * Quantity
From the attachment:
This question let’s refer to product CD as A and CD with instructional material as B
Cost have been separated and reported in a tabular format
Step 1: Find Total Revenue first
Step 2: Multiply each cost per unit for both products by the quantity to be produced
Step 3: Fixed cost per unit is to be multiplied by no of units to be produced
Step 4: Sum all costs together
Step 5: deduct from Total Revenue to arrive at Profit
From the solution, Total Cost for CD is $455,000 while Total Revenue is $672,000
CD Instrumental Material Total cost $644,000 while Total revenue is $1,092,000
For the purpose of decision making the product with the highest revenue is to be produced which is CD Instrumental with Material which generates a revenue of $448,000.
