Otsego Industries manufactured 300,000 units of product last year and identified the following costs associated with the manufacturing activity: Variable costs: Direct materials used. Direct labor Indirect materials and supplies Power to run plant equipment Fixed costs: Supervisory salaries Plant utilities (other than for plant equipment) Depreciation on plant and equipment Property taxes on building ($000) $ 6,120.0 4,060.0 1,420.0 1,300.0 $2,260.0 1,786.7 2,185.0 1,418.3 Required: Unit variable costs and total fixed costs are expected to remain unchanged in the following year. However, management expects a lowdown in sales, because of the economy in the following year. Calculate the unit cost and the total cost if 255,000 units are produced next month.

Otsego Industries manufactured 300,000 units of product last year and identified the following costs associated with the manufacturing activity: Variable costs: Direct materials used. Direct labor Indirect materials and supplies Power to run plant equipment Fixed costs: Supervisory salaries Plant utilities (other than for plant equipment) Depreciation on plant and equipment Property taxes on building ($000) $ 6,120.0 4,060.0 1,420.0 1,300.0 $2,260.0 1,786.7 2,185.0 1,418.3 Required: Unit variable costs and total fixed costs are expected to remain unchanged in the following year. However, management expects a lowdown in sales, because of the economy in the following year. Calculate the unit cost and the total cost if 255,000 units are produced next month.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

E 23

Hello, I am having trouble with determining Unit costs. Dividing the total costs by number of units, ( $18,615 / 255,000 = .073 ) is incorrect as well.

Otsego Industries manufactured 300,000 units of product last year and identified the following costs associated with the
manufacturing activity:
Variable costs:
Direct materials used
Direct labor
Indirect materials and supplies
Power to run plant equipment
Fixed costs:
Supervisory salaries
Plant utilities (other than for plant equipment)
Depreciation on plant and equipment
Property taxes on building
($000)
$ 6,120.0
4,060.0
1,420.0
1,300.0
$ 2,260.0
1,786.7
2,185.0
1,418.3
Required:
Unit variable costs and total fixed costs are expected to remain unchanged in the following year. However, management expects a
slowdown in sales, because of the economy in the following year. Calculate the unit cost and the total cost if 255,000 units are
produced next month.
Note: Enter your total cost answers in thousands. Round your answers to 2 decimal places.

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