1. [4 points]. Your startup-company launched its first product for sale two year

Question

1. [4 points]. Your startup-company launched its first product for sale two years ago. You produced 10,000 units in year 1 and 20,000 in year 2, with the costs as shown in the table below Year 1 $30,000 20,000 Year 2 $105,000 70,000 Direct Labor Direct Materials Overhead Variable Fixed 12,000 36,000 42,000 36,000 Selling and Administrative Costs Variable Fixed 5,000 22,000 17,500 22,000 For each year, determine the following: a. [1 points] Total manufacturing costs b. [0.5 points] Manufacturing costs per unit c. [1 points] Total variable costs d. [0.5 points] Total variable costs per unit e. [1 points] Total costs that have to be recovered if the firm is to make a profit

Explanation / Answer

Year 1 Year 2 Direct Labor 30000 105000 Direct Material 20000 70000 Overhead Variable 12000 42000 Fixed 36000 36000 Selling and Admin. Cost Variable 5000 17500 Fixed 22000 22000 Total Manufacuring cost = Direct Labor+Direct Material + Total of overheads+Total of Selling and Admin Cost For First Year:- Total Manufacturing cost = 30000+20000+48000+27000 =125000 For Second Year = 105000+70000+78000+39500=292500 Manufacturing cost per unit = Total manufacturing cost / number of units First Year per unit manufacturing cost = 125000/10000=12.5 per unit Second Year per unit manufacturing cost = 292500/20000=14.63 per unit Total Variable cost =Direct Labor +Direct Material+Variabl overhead +Variable Admins cos For First year = Total Varaible cost=30000+20000+12000+5000=67000 For Second Year = 105000+70000+42000+17500=234500 Total Varable cost per unit = Total variable cost / units produced For first year , Total variable cost per unit = 67000/10000=6.7 For second year , Total variable cost per unit = 234500/20000=11.73

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