a) Complete the chart, showing manufacturing cost at various levels of production for Company X Volume (units)
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Question:
a) | Complete the chart, showing manufacturing cost at various levels of production for Company X | |||||
Volume (units) | 10,000 | 20,000 | 30,000 | 40,000 | ||
Cost A | $25,000 | $25,000 | $25,000 | |||
Cost B | $25,000 | $50,000 | $100,000 | |||
Cost C | $33,000 | $48,000 | $78,000 | |||
Unit cost | $8.30 | |||||
b) | What pattern do you observe in the behavior of unit cost? Explain briefly why this occurs. | |||||
c) | Develop an equation in the form of Y = a +bx to forecast total manufacturing cost. Use this equation to forecast total costs at a level of 70,000 units. | |||||
d) | Identify one reason why your forecast in c) may be unreliable. |
Related Book For
Management Accounting
ISBN: 978-0132570848
6th Canadian edition
Authors: Charles T. Horngren, Gary L. Sundem, William O. Stratton, Phillip Beaulieu
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