I can\'t figure out the cost per unit!!! Please help me with the cost per unit i

Question

I can't figure out the cost per unit!!! Please help me with the cost per unit if the sell price is $46!!! Thank you!!!

Perez Modems has excess production capacity and is considering the possibility of making and selling paging equipment. The following estimates are based on a production and sales volume of 2,200 pagers: Unit-level manufacturing costs are expected to be $32. Sales commissions will be established at $2.2 per unit. The current facility-level costs, including depreciation on manufacturing equipment ($72,000), rent on the manufacturing facility ($62,000), depreciation on the administrative equipment ($15,600), and other fixed administrative expenses ($77,950), will not be affected by the production of the pagers. The chief accountant has decided to allocate the facility-level costs to the existing product (modems) and to the new product (pagers) on the basis of the number of units of product made (i.e., 6,200 modems and 2,200 pagers). Required a. Determine the per-unit cost of making and selling 2,200 pagers. (Do not round intermediate calculations. Round your answer to 3 decimal places.) b. Assuming the pagers could be sold at a price of $46 each, should Perez make the pagers? a. Cost per unit b. Should Perez make the pagers?

Explanation / Answer

notes:

the following is the calculation of cost per unit:

first let us know the allocation of facility costs:

administrative cost allocated to pagers = total cost * (number of pager / (number of pagers + number of modems))

=>$227,550 * (2,200 / (2200+6200))

=>$227,550 * (2200 / 8400)

=>$59,596.43.

facillity level cost per unit of pager = $59,596.43 / 2200 units

=>$59,596.43 / 2200

=>$27.089.

now,

making and selling cost per unit:

2nd explanation:

though the sale price is less than making and selling cost of $61.289, the Perez modems can go ahead with the making of pagers , since the relevant costs (i.e costs excluding facility costs of $27.089) are $34.20 which is less than the sale price of $46 each.

a. cost per unit $61.289 b.should perez make the pagers yes

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