K-Too Everwear Corporation can manufacture mountain climbing shoes for $43.03 per pair in variable raw material...

K-Too Everwear Corporation can manufacture mountain climbing shoes for $43.03 per pair in variable raw material costs and $25.45 per pair in variable labor expense. The shoes sell for $140 per pair. Last year, production was 110,000 pairs. Fixed costs were $1,150,000. What were total production costs? (Do not round intermediate calculations. Round your answer to the nearest whole number, e.g., 32.) Total production cost $ What is the marginal cost per pair? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) Marginal cost per pair $ What is the average cost per pair? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) Average cost per pair $ If the company is considering a one-time order for an extra 9,000 pairs, what is the minimum acceptable total revenue from the order? (Do not round intermediate calculations. Round your answer to the nearest whole number, e.g., 32.)

Solutions

Expert Solution

	Variable cost per unit
	Direct labor	43.03
	Direct Material	25.45		NO of units	=	Total variable cost
	Total variable cost per unit	68.48	x	110000	=	$ 7,532,800
	Add: fixed cost					$ 1,150,000
Part 1	Total prodn cost					$ 8,682,800

Part 2	Marginal cost is just its variable cost per uni = $68.48

Part 3	Average cost per unit	8682800÷110000 = $78.93

part 4	Since fixed cost does not change for additional unit of production of 9000 pairs
	Min revenue would be its variable cost = $68.48 x 9000 = $616,320

jeff jeffy answered 1 year ago

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