2. Dotball Candies manufactures jaw-breaker candies in a fully automated process. The machine that produces candies was purchased recently and can make 4,600 per month. The machine costs $10,000 and is depreciated using straight line depreciation over 10 years assuming zero residual value. Rent for the factory space and warehouse and other fixed manufacturing overhead costs total $1,400 per month. Dotball currently makes and sells 3,600 jaw-breakers per month. Dotball buys just enough materials each month to make the jaw-breakers it needs to sell. Materials cost 40 cents per jaw-breaker. Next year Dotball 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. Read the requirements. Requirement 1. What is Dotball's current annual relevant range of output? Dotball's current annual relevant range of output is 0 to 55,200 jaw-breakers Requirement 2. What is Dotball's current annual fixed manufacturing cost within the relevant range? What is the annual variable manufacturing cost? Dotball's current annual fixed manufacturing costs Dotball's current annual variable manufacturing costs $ 17.800 $ 17,280 Requirement 3. What will Dotball's relevant range of output be next year? How if at all, will total annual fixed and variable manufacturing costs change next year? Assume that if it needs to Dotball could buy an identical machine at the same cost as the one it already has. If the demand increases by 100%, annual production will have to increase to this amount of jaw-breakers next year to meet the expected increase Dotball has two options: (a) (1) or (b) (2) If the company decides to go with option (a), the variable cost per unit produced will (3) option (b), the variable cost per unit produced will (5) 86,400 and the annual fixed costs will (4). Should the company decide to go with and the annual fixed costs will (6). 1: Requirements 1. What is Dotball's current annual relevant range of output? 2. What is Dotball's current annual fixed manufacturing cost within the relevant range? What is the annual variable manufacturing cost? 3. What will Dotball's relevant range of output be next year? How if at all, will total annual fixed and variable manufacturing costs change next year? Assume that if it needs to Dotball could buy an identical machine at the same cost as the one it already has.

2. Dotball Candies manufactures jaw-breaker candies in a fully automated process. The machine that produces candies was purchased recently and can make 4,600 per month. The machine costs $10,000 and is depreciated using straight line depreciation over 10 years assuming zero residual value. Rent for the factory space and warehouse and other fixed manufacturing overhead costs total $1,400 per month. Dotball currently makes and sells 3,600 jaw-breakers per month. Dotball buys just enough materials each month to make the jaw-breakers it needs to sell. Materials cost 40 cents per jaw-breaker. Next year Dotball 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. Read the requirements. Requirement 1. What is Dotball's current annual relevant range of output? Dotball's current annual relevant range of output is 0 to 55,200 jaw-breakers Requirement 2. What is Dotball's current annual fixed manufacturing cost within the relevant range? What is the annual variable manufacturing cost? Dotball's current annual fixed manufacturing costs Dotball's current annual variable manufacturing costs $ 17.800 $ 17,280 Requirement 3. What will Dotball's relevant range of output be next year? How if at all, will total annual fixed and variable manufacturing costs change next year? Assume that if it needs to Dotball could buy an identical machine at the same cost as the one it already has. If the demand increases by 100%, annual production will have to increase to this amount of jaw-breakers next year to meet the expected increase Dotball has two options: (a) (1) or (b) (2) If the company decides to go with option (a), the variable cost per unit produced will (3) option (b), the variable cost per unit produced will (5) 86,400 and the annual fixed costs will (4). Should the company decide to go with and the annual fixed costs will (6). 1: Requirements 1. What is Dotball's current annual relevant range of output? 2. What is Dotball's current annual fixed manufacturing cost within the relevant range? What is the annual variable manufacturing cost? 3. What will Dotball's relevant range of output be next year? How if at all, will total annual fixed and variable manufacturing costs change next year? Assume that if it needs to Dotball could buy an identical machine at the same cost as the one it already has.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 31P: Jonfran Company manufactures three different models of paper shredders including the waste...

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