<span>Sebadoah should decrease his supply expense to 1,100 for the month of February. The extra $100 is just in case the month of February is busier and he'll have enough to supplies for the demand.</span>
Answer:
The Company will use the 64 unit cost for the make scenario
and use the 54 for the buy plus the fixed cost (6x 2000)
In the short term, when the fixed cost are unavoidable, the operating profit will increase to 6,000
in the long-term, the operating profit will increase to 18,000
Explanation:
Direct Materials 27
Direct Labor 16
Variable Overhead 14
Fixed Overhead 6
Total unit cost 63
Total Variable Cost 57
Offered Unit cost
108,000/2,000 = 54
Unit Cost $63.00 $54.00 $9.00
Total Cost $126,000.00 $108,000.00 $18,000.00
Unavoidable Fixed Cost $12,000.00 -$12,000.00
Total Cost $126,000.00 $120,000.00 $6,000.00
Answer:
a. supply of oranges will increase and the price of oranges will fall.
Explanation:
The crop will have impact on the producer of oranges, their field will have a better yields so, more orange supply. The supplier fixed cost will be distribute among more orange thus, her average cost will be lower.
If the cost is lower, then the price will decrease as well. This will generate an equilibrium cost at more quantity with a lower price.
Answer:
b. $0.40 per unit and $8,000
Explanation:
High low method separates the fixed cost and variable cost using net of Highest activity level and Lowest activity level and net of their relevant costs.
According to High low method
Variable cost per unit = ( Highest activity cost - Lowest activity cost ) / ( Highest Activity - Lowest activity )
Variable cost per unit = ( $120,000 - $74,000 ) / ( 280,000 - 165,000 )
Variable cost per unit = $46,000 / 115,000
Variable cost per unit = $0.4
Fixed operating cost = Total cost - Total Variable cost = $120,000 - ( 280,000 x $0.4 ) = $8,000
