Question

Princeton Manufacturing Company summarizes the following total cost data for the month of March. Princeton has a normal capacity per month of 25,000 units of product that sell for $80 each. For the foreseeable future, sales volume should equal normal capacity of production.

Direct material $590,000 Direct labor 330,000 Variable overhead 170,000 Fixed overhead (Note 1 280,000 Selling expense (Note 2 160,000 Administrative expense (fixed) 112,000 $1,642,000 Notes: 1. Beyond normal capacity, fixed overhead cost increases $12,700 for each 1,000 units or fraction thereof until a maximum capacity of 30,000 units is reached. 2. Selling expenses are a 5% sales commission plus shipping costs of $2.40 per unit.

a. Using the information available, prepare a formula to estimate Princeton's total cost at various production volumes up to normal capacity.

Total cost = $Answer 0 + $Answer 0 X # of units.

b. Prove your answer in requirement (a) relative to the total cost figure for 25,000 units.

Total cost = Fixed cost + Variable cost Answer 0 = Answer 0 + Answer 0

c. Calculate the planned total cost at 20,000 units. $Answer 0

d. If Princeton were operating at normal capacity and accepted an order for 500 more units, what would it have to charge for the order to earn a net income before income tax of $16 per unit on the new sale? Required selling price $Answer 0 per unit

Answer 1