Yumball Candies manufactures jaw-breaker candies in a fully automated process. The machine that produces candies was purchased
Question:
Yumball currently makes and sells 3,000 jaw-breakers per month. Yumball buys just enough materials each month to make the jaw-breakers it needs to sell. Materials cost 10 cents per jaw-breaker.
Next year Yumball expects demand to increase by 100%. At this volume of materials purchased, it will get a 10% discount on price. Rent and other fixed manufacturing overhead costs will remain the same.
Required
1. What is Yumball's current annual relevant range of output?
2. What is Yumball's current annual fixed manufacturing cost within the relevant range? What is the variable manufacturing cost?
3. What will Yumball's relevant range of output be next year? How will total fixed and variable manufacturing costs change next year?
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Related Book For
Cost Accounting A Managerial Emphasis
ISBN: 978-0133138443
7th Canadian Edition
Authors: Srikant M. Datar, Madhav V. Rajan, Charles T. Horngren, Louis Beaubien, Chris Graham
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