Longboat Manufacturing produces a single product requiring the following direct material and direct labor: Cost per Unit of Input Required Amount per Unit of Product Material A $9 / pound 20 ounces Material B $7 / pound 4 ounces Material C $25 / gallon 0.4 gallon Cutting labor $12 / hour 45 minutes Shaping labor $15 / hour 15 minutes Finishing labor $14 / hour 75 minutes
Manufacturing overhead consists of indirect materials, $0.60 per unit of product; indirect labor, $1,000 per month plus $0.75 per unit of product; factory maintenance, $17,000 per year plus $0.65 per unit of product; factory depreciation, $18,000 per year; and annual factory property taxes, $10,000. Selling and administrative expenses include the salaries of a sales manager, $40,000 per year; an office manager, $22,000 per year; and two salespersons, each of whom is paid a base salary of $15,000 per year and a commission of $4 per unit sold. Advertising and promotion of the product are done through a year-round media package program costing $1,500 per week.
a. Analyze all cost and expense factors to determine a general formula (based on units of production) for total cost.
Round variable cost per unit answers to two decimal places, if applicable. Total Fixed Costs Variable Cost per Unit Material A Answer Answer Material B Answer Answer Material C Answer Answer Cutting labor Answer Answer Shaping labor Answer Answer Finishing labor Answer Answer Manufacturing overhead: Indirect material Answer Answer Indirect labor Answer Answer Factory maintenance Answer Answer Factory depreciation Answer Answer Factory property taxes Answer Answer Selling and administration expenses Sales administration salaries Answer Answer Office administration salaries Answer Answer Sales salaries and commissions Answer Answer Advertising and promotion Answer Answer Total component cost Answer Answer
b. Assuming a relevant range of 10,000 to 30,000 units, what is the estimated unit cost for producing and selling 10,000 units? 25,000 units? Explain the variation in unit cost at the two levels of production.
Round answers to two decimal places.
Estimated per unit cost for 10,000 units $Answer
Estimated per unit cost for 25,000 units $Answer
c. If 22,000 units are produced and sold in a year, what selling price results in a net income before income tax of $75,000?
Round answers to two decimal places, if needed.