Munchak Company's relevant range of production is 9,000-11,000 units. Last month the company produced 10,000 units. Its total manufacturing cost per unit produced was $70. At this level of activity the company's variable manufacturing costs are 40% of its total manufacturing costs.
Required:
Assume that next month Munchak produces 10,050 units and that its cost behavior patterns remain unchanged. Label each of the following statements as true or false with respect to next month. Do not use a calculator to answer items 1 through 6. You can use a calculator to answer items 7 through 12. Record your answers by placing an X under the appropriate heading.
________________________________________________________________ True ___ False
1. The variable manufacturing cost per unit will remain the same as last month.
2. The total fixed manufacturing cost will be greater than last month.
3. The total manufacturing cost will be greater than last month.
4. The average fixed manufacturing cost per unit will be less than last month.
5. The total variable manufacturing cost will be less than last month.
6. The total manufacturing cost per unit will be greater than last month.
7. The variable manufacturing cost per unit will equal $28.
8. The total fixed manufacturing cost will equal $422,100.
9. The total manufacturing cost will equal $701,400.
10. The average fixed manufacturing cost per unit (rounded to the nearest cent) will equal $41.79.
11. The total variable manufacturing cost will equal $280,000.
12. The total manufacturing cost per unit (rounded to the nearest cent) will equal $69.79.