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M10-Chp-01-2-Prb-Unit-Cost-for-Basketballs - Tab 1 Problem...

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Tab: 1. Problem File: c352e1350892afd0889634f35ca1f28fb2dd8967.xls Page 1 of 2 Unit-Cost-for-Basketballs Boyer Company manufactures basketballs. The forecast for the year based on production and sales of 400,000 units. Amount Cost Per Unit Cost Per Unit 400,000 units 400,000 units 500,000 units Units Produced 400,000 400,000 500,000 Sales (Selling Price is $10 per Unit) $4,000,000 Manufacturing cost of goods sold Raw Materials 800,000 Direct Labor 500,000 Variable Costs (utilities, etc.) 700,000 Fixed Manufacturing Overhead (Rent) 1,200,000 Total Cost of Sales 3,200,000 Gross profit 800,000 Selling expenses (All variable) 100,000 Administrative exp. (All fixed) 200,000 Operating income $500,000 The company normally produces and sells 400,000 units per year, but has the capacity to produce and sell a total of 500,000 units per year. What is the manufacturing cost per unit: 1. At current capacity of 400,000 units? 2. At a potential capacity of 500,000 units? 3. Why are your unit cost amounts different?
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Tab: 2. Solution File: c352e1350892afd0889634f35ca1f28fb2dd8967.xls Page 2 of 2
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