ezto.mheducation.comhm.tpx anarysis ana Evaiu Question 2 (of 4) value: 5.00 poin

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ezto.mheducation.comhm.tpx anarysis ana Evaiu Question 2 (of 4) value: 5.00 points K-Too Everwear Corporation can manufacture mountain climbing shoes for $19.2 per pair in variable raw material costs and $13.63 per pair in variable labor expense. The shoes sell for $136 per pair. Last year production was 170,000 pairs. Fixed costs were $820,000. 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 selecty (e) 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 8,000 pairs, what is the minimum acceptable total revenue from the order? (Do not round your intermediate calculations.) (Click to select) References eBook& Resources Worksheet Learning Objective: 11-03 How to determine and interpret cash, accounting, and financial break-even points. Difficulty: Basic Section: 11.3 Break-Even Analysis

Explanation / Answer

Solution A Per unit cost Total Cost @ 170000 units Variable Material Cost 19.2          3,264,000 Variable labor Cost 13.63          2,317,100 Fixed Cost              820,000 Total Production cost          6,401,100 Solution B Marginal Cost per paid Variable Material Cost 19.2 Variable labor Cost 13.63 Total 32.83 Solution C Per unit cost Total Cost @ 170000 units Variable Material Cost 19.2          3,264,000 Variable labor Cost 13.63          2,317,100 Fixed Cost              820,000 Total Production cost          6,401,100 Total units              170,000 Average cost per pair                  37.65 Solution D For an additional order, minimum acceptable revenue will be its variable cost. Since Fixed cost are already recovered or say it is sunk cost Variable Material Cost 19.2 Variable labor Cost 13.63 Total 32.83 Total Units 8000 Minimum acceptable revenue =32.83*8000                               262,640

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