Problem
Lima Company manufactured 15,000 units of product last month and identified the following costs associated with the manufacturing activity:
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Variable costs:
|
|
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Direct materials used
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1,032,000
|
|
Direct labor
|
1,942,000
|
|
Indirect materials and supplies
|
238,000
|
|
Power to run plant equipment
|
214,000
|
|
Fixed costs:
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|
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Supervisory salaries
|
914,000
|
|
Plant utilities (other than power to run plant equipment)
|
283,000
|
|
Depreciation on plant and equipment (straight-line, time basis)
|
148,000
|
|
Property taxes on building
|
194,000
|
Required:
Unit variable costs and total fixed costs are expected to remain unchanged next month. Calculate the unit cost and the total cost if 21,000 units are produced next month.