2 3 expected cost to make 4320001536000 36000

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Unformatted text preview: sultingGroup  Total Overhead Costs $700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 Professional Labour-Hours Billed 10 ­‑20(20min.)Cost ­‑volume ­‑profitandregressionanalysis.  1a.    1b. Total manufacturing costs  Number of bicycle frames $900,000  = =$30perframe 30,000 Thiscostisgreaterthanthe$28.50perframethatRyanhasquoted. Averagecostofmanufacturing = Garvin cannot take the average manufacturing cost in 2012 of $30 per frameandmultiplyitby36,000bicycleframestodeterminethetotalcost of manufacturing 36,000 bicycle frames. The reason is that some of the $900,000(orequivalentlythe$30costperframe)arefixedcostsandsome are variable costs. Without distinguishing fixed from variable costs, Garvin cannot determine the cost of manufacturing 36,000 frames. For example, if all costs are fixed, the manufacturing costs of 36,000 frames willcontinuetobe$900,000.If,however,allcostsarevariable,thecostof manufacturing36,000frameswouldbe $30 × 36,000=$1,080,000.Ifsome costs are fixed and some are variable, the cost of manufacturing 36,000 frameswil...
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This document was uploaded on 02/04/2014.

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