K-Too Everwear Corporation can manufacture mountain climbing shoes for $12.05 pe

Question

K-Too Everwear Corporation can manufacture mountain climbing shoes for $12.05 per pair in variable raw material costs and $12.15 per pair in variable labor expense. The shoes sell for $141 per pair. Last year, production was 160,000 pairs. Fixed costs were $830,000. Required (a) What were total production costs? (Do not round your intermediate calculations.) (Click to select) (b) What is the marginal cost per pair? (Do not round your intermediate calculations.) (Click to select) (c) What is the average cost? (Do not round your intermediate calculations.) (Click to select) (d) If the company is considering a one-time order for an extra 6,000 pairs, what is the minimum acceptable total revenue from the order? (Do not round your intermediate calculations.) (Click to select)

Explanation / Answer

a)Total variable cost : 160000[12.05+12.15]

          = 3872000

Total production cost =Variable+ fixed

        = 3872000+830000

       = $ 4,702,000

b)Marginal cost per pair =direct material +variable labor

    = 12.05+12.15

   = $ 24.20

c)Average cost =Total production cost/number of pairs

= 4,702,000/160,000

= $ 29.39

d)Minimum acceptable revenue =Number of pairs*marginal cost

            = 6000*24.20

         = $ 145200

Related Questions

Navigate

• Browse (All)
• Browse K
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.