Appex company can produce 4,000 units of a product at 100% capacity. Following information is abailable...

Appex company can produce 4,000 units of a product at 100% capacity. Following information is abailable from its records:

Units produced	2800	3600
power	1800	2000
repair and maintenance	500	560
indirect labor	700	900
consumable stores	1400	1800
inspection	200	240
depreciation	1400	1400
salary	1000	1000

Direct Material cost $1 per unit

Direct wage cost $4 per hour

Rate of the prodcution per hour is 10 units

You are required to compute the cost of the production at 100%, 80% and 60% capacity level showing variable, semi variable and fixed items under flexible budget

Expert Solution

Units produced	2800	3600
power	1800	2000	Semi-variable
repair and maintenance	500	560	Semi-variable
indirect labor	700	900	Variable
consumable stores	1400	1800	Variable
inspection	200	240	Semi-Variable
depreciation	1400	1400	Fixed
salary	1000	1000	Fixed

Power =
Variable cost = (2000 - 1800) / (3600-2800) = 0.25
Fixed cost = 1800 - 2800*.25 = 1100

Repair and maintenance =
Variable Cost = (560 - 500) / (3600 - 2800) = 0.075
Fixed cost = 500 - 2800 * 0.075 = 290

Inspection =
Variable cost = (240 - 200) / (3600 - 2800) = 0.05
Fixed cost = 200 - 2800 * 0.05 = 60

Total variable cost = Direct material ($1) + Direct wage cost ($4/10) + Power + Repair and maintenance + indirect labor + Consumables + inspection
= 1 + 0.4 + 0.25 + 0.075 + 0.05
= 1.775
Total fixed cost = Power + Repair and maintenance + inspection + Depreciation + salary
= 1100+ 290 + 60 + 1400 +1000
= 3850

Cost of production at 100% = Units * Variable cost + Fixed cost
= 4000 units * 1.775 + 3850
= 10,950

Cost of production at 80% = Units * Variable cost + Fixed cost
= 3200 units * 1.775 + 3850
= 9530

Cost of production at 60% = Units * Variable cost + Fixed cost
= 2400 units * 1.775 + 3850
= 8110

ekkarill92 answered 1 year ago

ortune Company can produce 100 units of a component part of its product with the following...

ortune Company can produce 100 units of a component part of its product with the following costs: Variable manufacturing costs: $37,500 Fixed overhead costs: $11,000 Fortune can purchase 100 units of this component part from an outside vendor for $44,000. In doing so, fixed costs of $6,000 can be avoided. What decision should Fortune make? Make and save $500. Buy and save $500. Make and save $2,500. Buy and save $6,500.

a) A company can sell all the units it can produce of either Product A or...

a) A company can sell all the units it can produce of either Product A or Product B but not both. Product A has a unit contribution margin of $16 and takes two machine hours to make and Product B has a unit contribution margin of $30 and takes three machine hours to make. If there are 5,000 machine hours available to manufacture a product, income will be $10,000 more if Product A is made. $10,000 less if Product B...

1.) The AB Company produces 4,000 units of product A and 6,000 units of product B...

1.) The AB Company produces 4,000 units of product A and 6,000 units of product B in a joint production process. If a weight factor of 2 is assigned to each unit of product A and a weight factor of 3 is assigned to each unit of product B, the weighted number of units would be: A. product A 2,000 units and B 2,000 units. B. product A 8,000 units and product B 18,000 units. C. product A 1,600 units...

A. A firm has the capacity to produce 988,272 units of a product each year. At...

A. A firm has the capacity to produce 988,272 units of a product each year. At present, it is operating at 24 percent of capacity. The firm's annual revenue is $1007128. Annual fixed costs are $599333 and the variable costs are $0.65 per unit. What s the firm's annual profit or loss? B. A firm has the capacity to produce 1,386,753 units of a product each year. At present, it is operating at 62 percent of capacity. The firm's annual...

Suppose a profit-maximizing firm can produce 100 units of a hypothetical product, wendals (selling at a...

Suppose a profit-maximizing firm can produce 100 units of a hypothetical product, wendals (selling at a price of $1 per unit), by combining labor, land, capital, and entrepreneurial ability in each of the four ways shown in the table below. Assume further that the firm can hire labor at $6 per unit, capital at $4 per unit, and entrepreneurship at $2 per unit. TECHNIQUES A B C LABOR 4 6 8 LAND 4 3 CAPITAL 5 4 ENTREPRENEURSHIP 1...

Goshford Company produces a single product and has capacity to produce 140,000 units per month. Costs...

Goshford Company produces a single product and has capacity to produce 140,000 units per month. Costs to produce its current sales of 112,000 units follow. The regular selling price of the product is $110 per unit. Management is approached by a new customer who wants to purchase 28,000 units of the product for $77.40 per unit. If the order is accepted, there will be no additional fixed manufacturing overhead and no additional fixed selling and administrative expenses. The customer is...

The seller of a product has no idle capacity and can sell all it can produce...

The seller of a product has no idle capacity and can sell all it can produce at $33 per unit. The incremental variable cost is $9. What is the lost opportunity (cost) if the seller transfers the units to another division? Question 6 options: a) $6 b) $ 0 c) $12 d) $33 e) $24

A firm has the capacity to produce 1 359 240 units of a product each year....

A firm has the capacity to produce 1 359 240 units of a product each year. At present, it is operating at 81 percent of capacity. The firm's annual revenue is $1 396 130. Annual fixed costs are $214 191 and the variable costs are $.32 cents per unit. The following equations will be useful. Profit = Revenue - Costs Revenue = Price each * quantity Costs = Fixed Cost + Variable Costs Variable Cost = Variable Cost per unit...

If Blue country uses it resources to produce q-tips, it can produce 100 units. For the...

If Blue country uses it resources to produce q-tips, it can produce 100 units. For the same resources, Blue country could choose to produce 25 units of pens. For Green country, it is either 90 units of q-tips or 30 units of pens. Alright, first of all, who has the absolute advantage in q-tips, pens? Who has the comparative advantage in q-tips, pens? Should this countries trade? If so, at what “price” range?

Peerless Manufacturing is a profit-maximizing firm and, operating at capacity, it can produce 50 units of...

Peerless Manufacturing is a profit-maximizing firm and, operating at capacity, it can produce 50 units of output per production period using any one of the following techniques of production. The market price of land, labor, capital are $5, $4, $6, respectively. And the profit associated with T1 is $124. TECHNIQUE T1 T2 T3 T4 LAND 8 8 8 8 LABOR 16 18 20 22 CAPITAL 12 8 6 3 The price of a unit of output is _______. If this...

Question