Question 2:The cost per unit for materials is $4.43.

The cost per unit for labour is $1.67.

The total estimated variable cost per unit is $6.10.

Eastern Broom Company manufactures, amongst other broom products, corn brooms. To make a corn broom, a worker begins the manufacturing process by selecting a bundle of straw, which is prepackaged by the supplier, and a broom handle. The worker puts both items into a machine and presses a button. The machine then binds the bundle of straw and the broom handle to complete production. A production worker, who is paid $40 per hour, can make 20 corn brooms each hour. Total production is limited by the number of labour hours available, which is 1,500. Eastern Broom Company sells its corn brooms for $28 each and is currently operating at capacity. Annual fixed costs assigned to the corn broom operation is $540,000. A group of students from a local university has undertaken a statistical cost study for Eastern Broom Company. The students believe that a reasonable estimate of the labour cost per unit of production is $2.00 and the cost of materials per unit of production is $6.00. The product manager has advised you to use these cost estimates for materials and labour when answering the questions that follow. Week Week 16 17 1 2 3 4 5 18 V + W NA 19 20 6 Units Produced 23,800 25,400 27,600 26,600 21,600 26,300 22,200 25,000 29,600 21,100 24,800 25,800 28,700 24,600 27,100 7 Direct Labour $46,400 $54,700 $48,400 $46,200 $36,600 $55,600 $38,500 $55,200 $55,700 $39,000 $50,400 $61,900 $59,800 $54,900 $53,400 Direct Materials $135,100 $146,400 $160,200 $152,000 $143,600 $160,300 $140,500 $169,300 $151,200 $132,200 $155,200 $151,900 $158,100 $157,600 $175,700 21 22 Units Produced 25,800 25,400 28,500 23,600 27,000 25,900 25,100 29,700 27,400 21,400 21,400 23,200 23,700 23,800 23,700 Direct Labour $51,600 $52,300 $53,400 $50,200 $47,600 $50,400 $52,800 $53,400 $54,700 $43,000 $44,000 $50,300 $46,400 $51,700 $47,400 Direct Materials $186,100 $139,900 $164,300 $152,100 $147,700 $145,700 $146,700 $170,300 $183,400 $118,400 $140,400 $152,400 $135,500 $145,700 $132,900 8 9 23 24 10 11 25 26 12 27 13 28 29 14 15 30 Question 4 If we assume that the materials and labour cost per corn broom are best estimated by the costs estimated by the students, what would be the consequences of Eastern Corn Broom ignoring these estimates and using the estimates you developed in Question 2 instead. Identify 3 consequences and confine your response to this question to 50 or fewer words