Requirement 1. Fred's Flasks, sells flanges for

$10.25

each. Can

Giuseppina

sell below Fred's price and still make a profit on the flanges? Assume

Giuseppina

produces and sells

3,000

flanges this period.

Begin by determining the formula used to calculate the total cost per unit. Choose the correct answer below.

A.(Total fixed

costs+Total

variable

costs)Materials

cost per

unit=Total

cost per unit

B.(Total fixed

costs+Total

variable

costs)Wage

rate per

hour=Total

cost per unit

C.(Total fixed

costs+Total

variable

costs)Units

produced and

sold=Total

cost per unit

D.(Materials cost per

unit+Wage

rate per

hour)Units

produced and

sold=Total

cost per unit

Part 2

Complete the sentence below. (Round the total cost per unit to two decimal places.)

The total cost per unit to manufacture

3,000

flanges is

$enter your response here,

therefore, they

can

can not

make a profit when compared to Fred's Flasks selling price of

$10.25

each.

Part 3

Requirement 2. How would your answer to requirement 1 differ if

Giuseppina's

Glassworks made and sold

11,000

flanges this period? Why? What does this indicate about the use of unit cost in decision making? (Round the total cost per unit to two decimal places.)

The total cost per unit to manufacture

11,000

flanges would be

$enter your response here.

Part 4

With production and sales at this level, the company

could

could not

potentially make a profit if the selling price is below

$10.25

each. Managers must be cautious using unit costs for decision making because

total fixed costs

total variable costs

do not change at the unit level.

Giuseppina's Glassworks makes glass flanges for scientific use. Materials cost $2 per flange, and the glass blowers are paid a wage rate of $30 per hour. A glass blower blows 10 flanges per hour. Fixed manufacturing costs for flanges are $28,000 per period. Period (non-manufacturing) costs associated with flanges are $14,000 per period, and are fixed. Requirements 1. Fred's Flasks, sells flanges for $10.25 each. Can Giuseppina sell below Fred's price and still make a profit on the flanges? Assume Giuseppina produces and sells 3,000 flanges this period. 2. How would your answer to requirement 1 differ if Giuseppina's Glassworks made and sold 11,000 flanges this period? Why