Lopez Mfg. is interested in estimating fixed and variable manufacturing costs us
ID: 2380068 • Letter: L
Question
Lopez Mfg. is interested in estimating fixed and variable manufacturing costs using data from October. Based on judgment, the plant manager classified each manufacturing cost as fixed, variable, or part fixed and part variable:Units Produced Cost October 1,500 $136,100 Detail of Cost: Cost Behavior Material $63,000 Variable Direct labor 24,000 Variable Depreciation 8,000 Fixed Phone 300 Fixed Other utilities 4,500 20% Fixed Supervisory salaries 25,200 75% Fixed Equipment repair 6,500 20% Fixed Indirect materials 600 Variable Factory maintenance 4,000 80% Fixed Total $136,100 Lopez Mfg. is interested in estimating fixed and variable manufacturing costs using data from October. Based on judgment, the plant manager classified each manufacturing cost as fixed, variable, or part fixed and part variable:
Units Produced Cost October 1,500 $136,100 Detail of Cost: Cost Behavior Material $63,000 Variable Direct labor 24,000 Variable Depreciation 8,000 Fixed Phone 300 Fixed Other utilities 4,500 20% Fixed Supervisory salaries 25,200 75% Fixed Equipment repair 6,500 20% Fixed Indirect materials 600 Variable Factory maintenance 4,000 80% Fixed Total $136,100 Exercise 4-10 Lopez Mfg. is interested in estimating fixed and variable manufacturing costs using data from October. Based on judgment, the plant manager classified each manufacturing cost as fixed, variable, or part fixed and part variable:
Units Produced Cost October 1,500 $136,100 Detail of Cost: Cost Behavior Material $63,000 Variable Direct labor 24,000 Variable Depreciation 8,000 Fixed Phone 300 Fixed Other utilities 4,500 20% Fixed Supervisory salaries 25,200 75% Fixed Equipment repair 6,500 20% Fixed Indirect materials 600 Variable Factory maintenance 4,000 80% Fixed Total $136,100 Lopez Mfg. is interested in estimating fixed and variable manufacturing costs using data from October. Based on judgment, the plant manager classified each manufacturing cost as fixed, variable, or part fixed and part variable: Use account analysis to estimate fixed cost per month and variable cost per unit produced. (Round variable cost per unit to 2 decimal places, e.g. 125.25.) Based on your answer to part a, what is your estimate of the incremental cost of producing 500 units? (Round answer to 0 decimal places, e.g. 125.)
Explanation / Answer
fixed cost = 8000+300+0.2*4500+0.75*25200+0.2*6500+0.8*4000 =32600 per month
total variable cost = total -fixed cost =$136,100 - 32600 =103500
var cost per unit = 103500/1500 = 69/unit
incremental cost of producing 500 units = 500*unit var. cost = 69*500 = 34500$
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.