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10.08.2021 •
Business
Sheridan Company determines that 50000 pounds of direct materials are needed for production in July. There are 2800 pounds of direct materials on hand at July 1 and the desired ending inventory is 2400 pounds. If the cost per unit of direct materials is $3, what is the budgeted total cost of direct materials purchases
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Ответ:
Toys produced 40,000 80,000 120,000
Total costs:
Total variable costs $720,000 $1,440,000 $2,160,000
Total fixed costs $600,000 $600,000 $600,000
Total costs $1,320,000 $2,040,000 $2,760,000
Cost per Unit
Variable cost $18 $18 $18
Fixed cost $15 $7.50 $5
Total cost $33 $25.50 $23
Fixed costs do not change with total output, they are the same regardless so the number of units produced. Variable costs change proportionally to any change in total output. If total output increases, variable costs will increase.