Question:
The following information provides the amount of cost incurred in May for the cost items indicated. During August 8,000 units of the firm's single product were manufactured.
Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 41,600
Factory depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40,500
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,200
Production supervisor's salary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,100
Computer rental expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,200
Maintenance supplies used . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 800
Required:
a. How much cost would you expect to be incurred for each of these items during September when 9,600 units of the product are planned for production?
b. Calculate the average total cost per unit for the 8,000 units manufactured in May. Explain why this figure would not be useful to a manager interested in predicting the cost of producing 9,600 units in September.