The salespeople at Culver, a notebook manufacturer, commonly pressured operations managers to keep costs down so...

Transcribed Image Text:

The salespeople at Culver, a notebook manufacturer, commonly pressured operations managers to keep costs down so the company could give bigger discounts to large customers. David, the operations supervisor, leaked the $0.80 total unit cost to salespeople, who were thrilled, since that was slightly lower than the previous year's unit cost. Budgets were not yet finalized for the upcoming year, so it was unclear what the target unit cost would be. David knew the current year's operating capacity was two million notebooks, and Culver produced and sold just that many. The detailed breakdown of the $0.80 total unit cost is as follows. Direct material $0.05 Direct labor 0.20 Variable overhead 0.15 Fixed overhead 0.40 Total cost per unit $0.80 (a) What were Culver's total fixed costs? If the average selling price was $2.05, how much gross margin did the company generate? Total fixed costs S Gross margin The salespeople at Culver, a notebook manufacturer, commonly pressured operations managers to keep costs down so the company could give bigger discounts to large customers. David, the operations supervisor, leaked the $0.80 total unit cost to salespeople, who were thrilled, since that was slightly lower than the previous year's unit cost. Budgets were not yet finalized for the upcoming year, so it was unclear what the target unit cost would be. David knew the current year's operating capacity was two million notebooks, and Culver produced and sold just that many. The detailed breakdown of the $0.80 total unit cost is as follows. Direct material $0.05 Direct labor 0.20 Variable overhead 0.15 Fixed overhead 0.40 Total cost per unit $0.80 (a) What were Culver's total fixed costs? If the average selling price was $2.05, how much gross margin did the company generate? Total fixed costs S Gross margin