Question

In: Accounting

United Motors specializes in producing one specialty vehicle. It is called surfr and is styled to...

United Motors specializes in producing one specialty vehicle. It is called surfr and is styled to easily fit surfboards in its back area and top-mounted storage racks: United has the following manufacture costs:

Plant management​ costs, 1,464,000 per year

Cost of leasing equipment 2.328,000 per year

Workers wages $700 per suffer vehicle produced

Direct material costs, Steel $1,500 per Surfer; Tires $130 per tire, each surfer take 5 tires (one spare) City license, which is charged monthly based on the numbers of tires used in production

0-500 tires $20,000

501-1000 tires $60,000

more than $1000 tires $160,000

1.

What is the variable manufacturing cost per​ vehicle? What is the fixed manufacturing cost per​ month?

2.

Plot a graph for the variable manufacturing costs and a second for the fixed manufacturing costs per month. How does the concept of relevant range relate to your​ graphs? Explain.

3.

What is the total manufacturing cost of each vehicle if 100 vehicles are produced each​ month? 225 vehicles?
​vehicles? How do you explain the difference in the manufacturing cost per​ unit?

Solutions

Expert Solution

1. Variable manufacturing cost per vehicle = $2,150.

Fixed overhead cost per annum = $3,792,000

Fixed cost per month = $31,600

Working:

Wages per vehicle 700
Direct material per vehicle
Steel 1500
tires( 5 x 130) 650 2150
Total variable manufacturing cost per vehicle 2150
Plant management costs 1464000
Cost leasing equipment 2328000
Total fixed manufacturing cost per annum 3792000

2.

3.

Cost for 100 vehicles per month
Total Per unit
Variable costs (2,150 x 100) 215000
Fixed costs 31600
Licence costs * 20000
Total Costs 266600 2666
500 tires @5 tyres per tyre.
Cost for 250 vehicles per month
Total Per unit
Variable costs (2,150 x 250) 537500
Fixed costs 31600
Licence costs * 160000
Total Costs 729100 2916.4
2,500 tires @5 tyres per tyre.
The cost per vehicle has gone up because of increase in the
licensing cost .

Related Solutions

United Motors specializes in producing one specialty vehicle. It is called Surfer and is styled to...
United Motors specializes in producing one specialty vehicle. It is called Surfer and is styled to easily fit multiple surfboards in its back area and​ top-mounted storage racks. United has the following manufacturing​ costs: United currently produces 180 vehicles per month Plant management​ costs, $1,728,000 per year Cost of leasing​ equipment, $2,856,000 per year ​Workers' wages, $800 per Surfer vehicle produced Direct materials​ costs: Steel, $1,600 per​ Surfer; Tires, $150 per​ tire, each Surfer takes 5 tires​ (one spare) City​...
Thompson Motors specializes in producing one specialty vehicle. It is called Turner and is styled to...
Thompson Motors specializes in producing one specialty vehicle. It is called Turner and is styled to easily fit multiple surfboards in its back area and top-mounted storage racks. Thompson has the following manufacturing costs: Plant management costs, $1,200,000 per year Cost of leasing equipment, $1,300,000 per year Workers’ wages, $700 per Surfer vehicle produced Direct materials costs: Steel, $1,500 per Turner, Tires, $125 per tire, each Turner takes 5 tires (one spare). City license, which is charged monthly based on...
Tesla Motors entered the market with their first electric vehicle called Roadster in 2008. As the...
Tesla Motors entered the market with their first electric vehicle called Roadster in 2008. As the company was still young, their development was based on existing technology of Lotus Elise, an existing car model made in UK. The Roadster was a two-seater sports car and was only manufactured for a few years until it was discontinued due to poor sales. During that time, the Roadster was sold for 100,000 USD as an innovative electric two-seat sporty car for car enthusiasts....
Map071 Shop specializes in producing and selling pouch bags. Currently, there is only one type of...
Map071 Shop specializes in producing and selling pouch bags. Currently, there is only one type of pouch bag being produced and sold by the shop, namely Baby On. The newly designed pouch bag is carefully produced by the business owner, Ms. Meisa. The materials are specially purchased from the best supplier in town and the processes are followed under strict quality control. The selling price for Baby On is RM42 per unit. The following information is gathered for the purpose...
You work in the Finance division of a large recreational vehicle company that specializes in 4-wheel...
You work in the Finance division of a large recreational vehicle company that specializes in 4-wheel utility vehicles. As reward for your excellent performance, you have been assigned as Division Accountant for a new division that will be manufacturing and selling snowmobiles. In your new position, you will have a dual reporting responsibility to both the new Snowmobile Division head as well as the Controller in the Finance Division. The Controller has requested you put together an analysis of the...
The Mahela Company specializes in producing sets of wooden patio furniture consisting of a table and...
The Mahela Company specializes in producing sets of wooden patio furniture consisting of a table and four chairs. The company has ample orders to keep production going at its full capacity of 2,200 sets per quarter. Quarterly cost data at full capacity follow:      Factory labour, direct $ 119,000   Advertising 50,200   Factory supervision 40,200   Property taxes, factory building 3,700   Sales commissions 81,000   Insurance, factory 2,700   Depreciation, office equipment 4,200   Lease cost, factory equipment 12,200   Indirect materials, factory 6,200   Depreciation, factory...
The Mahela Company specializes in producing sets of wooden patio furniture consisting of a table and...
The Mahela Company specializes in producing sets of wooden patio furniture consisting of a table and four chairs. The company has ample orders to keep production going at its full capacity of 2,600 sets per quarter. Quarterly cost data at full capacity follow:      Factory labour, direct $ 121,000   Advertising 50,600   Factory supervision 40,600   Property taxes, factory building 4,100   Sales commissions 83,000   Insurance, factory 3,100   Depreciation, office equipment 4,600   Lease cost, factory equipment 12,600   Indirect materials, factory 6,600   Depreciation, factory...
The Dorilane Company specializes in producing a set of wood patio furniture consisting of a table...
The Dorilane Company specializes in producing a set of wood patio furniture consisting of a table and four chairs. The set enjoys great popularity, and the company has ample orders to keep production going at its full capacity of 2,000 sets per year. Annual cost data at full capacity follow: Direct labor $ 118,000 Advertising $ 50,000 Factory supervision $ 40,000 Property taxes, factory building $ 3,500 Sales commissions $ 80,000 Insurance, factory $ 2,500 Depreciation, administrative office equipment $...
The Mahela Company specializes in producing sets of wooden patio furniture consisting of a table and...
The Mahela Company specializes in producing sets of wooden patio furniture consisting of a table and four chairs. The company is currently operating at 80% of its full capacity of 2,400 sets per quarter. Quarterly cost data at this level of operations follow: Factory labour, direct $ 120,000 Advertising 50,400 Factory supervision 40,400 Property taxes, factory building 3,900 Sales commissions 82,000 Insurance, factory 2,900 Depreciation, office equipment 4,400 Lease cost, factory equipment 12,400 Indirect materials, factory 6,400 Depreciation, factory building...
Merlin’s Landscapes is a small local nursery that specializes in producing cardinal and gold azaleas. The...
Merlin’s Landscapes is a small local nursery that specializes in producing cardinal and gold azaleas. The azaleas are dug up and potted after three years of growth. Some of them are considered premium because they are taller and have more blooms in bud than the rest. If sold when dug up, a premium plant is worth $5. The premium plants can be placed in a greenhouse for several months, fertilized heavily, repotted for $10 per plant, and then sold when...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT