Question

In: Accounting

HASF Glassworks makes glass flanges for scientific use Material cost Rs.10 per flange and the glass...

HASF Glassworks makes glass flanges for scientific use Material cost Rs.10 per flange and the glass blowers are paid a wage rate of 100 per hours a glass blower blows 20 flanges in two hours. Fixed manufacturing costs for flanges are 25000 per period. other non-manufacturing cost associated with flanges
are 10,000 per period and are fixed.
Required:
a. Find out variable cost per units and total fixed cost.
b. Assume Company manufactures and sells 10,000 flanges this period their competitor sells
flanges for 15 each. can company sell below competitor price and make a profit on the
flanges
c. How would be your answer to requirement 2 differ if company made and sold 20,000
flanges this period why

Solutions

Expert Solution

Answer:- material cost = 10000× 10 = ₹100000

wage rate = 100 ₹ per hour

Blowers blow 20 flanges in two hour

For 10000 flanges hour required = 2/20×10000 = 1000 hour.

Wage for 1000 hours = 100/1×1000= ₹10000

a) variable cost = 100000 +10000 = ₹110000

variable cost = ₹110000/10000units = ₹11 per unit

Total fixed cost = 25000 +10000 = ₹35000

b) total cost for 10000 flanges = 10000×11 + 35000 = ₹145000

Cost per unit = 145000/10000units = ₹14.5

Company can sell below it's competitor price to make profit because it's cost of production is less than the price of competitors.

c) if company sell 20000 units

Varible cost = 11×20000 =₹220000

Fixed cost = ₹35000

Total cost = ₹255000

Cost per unit =₹ 12.75 (255000/20000)

Cost will decrease if production will be of 20000 units.

ekkarill92 answered 2 years ago
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