Exercise 5. Manufacturing and non-manufacturing costs. Greencare Corporation Greencare Corporation produces power lawn mowers. The company...

 

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Exercise 5. Manufacturing and non-manufacturing costs. Greencare Corporation Greencare Corporation produces power lawn mowers. The company reported the following data for its most recent year of activity: Production Sales Inventories None Costs: Direct materials: Direct labor Overhead: Indirect materials Supervision Depreciation Utilities Selling: 30,000 units 30,000 units at $ 300 each Commissions (10% of selling price) Salaries Administrative $1,500,000 450,000 100,000 100,000 440,000 50,000 900,000 150,000 180,000 1. Prepare a cost formula for manufacturing costs, expressed as TC =FC +AVC x Units. 2. Compute the unit cost of production if production is 30,000 units; 15,000 units; 40,000 units. Why does the unit cost change? 3. What is the unit cost of direct materials at each of the three production levels in (2)? of direct labor? of overhead? 4. Compute the total cost of operating the firm if Greencare produces and sells 30,000 units; 15,000 units; 40,000 units. Exercise 5. Manufacturing and non-manufacturing costs. Greencare Corporation Greencare Corporation produces power lawn mowers. The company reported the following data for its most recent year of activity: Production Sales Inventories None Costs: Direct materials: Direct labor Overhead: Indirect materials Supervision Depreciation Utilities Selling: 30,000 units 30,000 units at $ 300 each Commissions (10% of selling price) Salaries Administrative $1,500,000 450,000 100,000 100,000 440,000 50,000 900,000 150,000 180,000 1. Prepare a cost formula for manufacturing costs, expressed as TC =FC +AVC x Units. 2. Compute the unit cost of production if production is 30,000 units; 15,000 units; 40,000 units. Why does the unit cost change? 3. What is the unit cost of direct materials at each of the three production levels in (2)? of direct labor? of overhead? 4. Compute the total cost of operating the firm if Greencare produces and sells 30,000 units; 15,000 units; 40,000 units.

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Answer 1 Cost Formula Units Manufactured 30000 Total Cost Cost Per Unit Variable Cost Direct material 1500000 50 Direct labour 450000 15 Indirect mate... View the full answer