6. Carsen Company manufactures two products Atlas and Bertha that sell for $120 and $80 respectively....
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6. Carsen Company manufactures two products Atlas and Bertha that sell for $120 and $80 respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 100,000 units of each product. Its unit costs for each product at this level of activity are given in the chart below: ATLAS $30 20 7 16 12 BERTHA $12 Direct materials Direct labor 15 Variable manufacturing overhead 5 Traceable fixed manufacturing overhead 18 Variable selling expense 8 Common fixed expenses 15 10 Total cost per unit $100 $68 The company considers its traceable fixed overhead to be avoidable, whereas its common fixed expenses are deemed unavoidable and have been allocated to products based on sales dollars a. What is the total amount of traceable fixed manufacturing overhead for the Atlas product line and for the Bertha product line? b. What is the company's total amount of common fixed expenses? c. Assume that Carsen expects to produce and sell 80,000 units of Atlas during the current year. One of Carsen's best sales representatives (Joe Wentz) has found a new customer willing to buy 10,000 additional units of Atlas for a price of $80 per unit. If Carsen accepts the customers offer, how much will its profits increase or decrease? 6. Carsen Company manufactures two products Atlas and Bertha that sell for $120 and $80 respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 100,000 units of each product. Its unit costs for each product at this level of activity are given in the chart below: ATLAS $30 20 7 16 12 BERTHA $12 Direct materials Direct labor 15 Variable manufacturing overhead 5 Traceable fixed manufacturing overhead 18 Variable selling expense 8 Common fixed expenses 15 10 Total cost per unit $100 $68 The company considers its traceable fixed overhead to be avoidable, whereas its common fixed expenses are deemed unavoidable and have been allocated to products based on sales dollars a. What is the total amount of traceable fixed manufacturing overhead for the Atlas product line and for the Bertha product line? b. What is the company's total amount of common fixed expenses? c. Assume that Carsen expects to produce and sell 80,000 units of Atlas during the current year. One of Carsen's best sales representatives (Joe Wentz) has found a new customer willing to buy 10,000 additional units of Atlas for a price of $80 per unit. If Carsen accepts the customers offer, how much will its profits increase or decrease?
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a Working Notes I x b Working Notes I x C Working Notes I IV V Traceable fixed manufacturing overhea... View the full answer
Related Book For
Basic Business Statistics Concepts and Applications
ISBN: 978-0132168380
12th edition
Authors: Mark L. Berenson, David M. Levine, Timothy C. Krehbiel
Posted Date:
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