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The salespeople at Metlock, a notebook manufacturer, commonly pressured operations managers to keep costs down so the company could give bigger discounts to large customers. Richard, the operations supervisor, leaked the $0.65 total unit cost to salespeople, who were thrilled, since that was slightly lower than the previous year's unit cost. Budgets were not yet finalized for the upcoming year, so it was unclear what the target unit cost would be. Richard knew the current year's operating capacity was two million notebooks, and Metlock produced and sold just that many. The detailed breakdown of the $0.65 total unit cost is as follows. Direct material Direct labor M Variable overhead 0.15 Fixed overhead 0.20 Total cost per unit $0.65 (a) (b) Your answer is correct. What were Metlock's total fixed costs? If the average selling price was $2.10, how much gross margin did the company generate? Gross margin Total fixed costs $ $0.15 0.15 Fixed costs eTextbook and Media Total cost per unit Gross margin $ Save for Later If Metlock incurs exactly the same total fixed costs but produces and sells only 1,600,000 notebooks this coming year, what happens to the fixed cost per unit? In turn, what would the total cost per unit be? If the average selling price stays at $2.10, how much gross margin would be earned? (Round per unit answers to 2 decimal places, e.g. 15.25.) eTextbook and Media 400000 2900000 Increased ✓ by $ $ $ per unit Attempts: 1 of 3 used per unit Attempts: 0 of 3 used Submit Answer

The salespeople at Metlock, a notebook manufacturer, commonly pressured operations managers to keep costs down so the company could give bigger discounts to large customers. Richard, the operations supervisor, leaked the $0.65 total unit cost to salespeople, who were thrilled, since that was slightly lower than the previous year's unit cost. Budgets were not yet finalized for the upcoming year, so it was unclear what the target unit cost would be. Richard knew the current year's operating capacity was two million notebooks, and Metlock produced and sold just that many. The detailed breakdown of the $0.65 total unit cost is as follows. Direct material Direct labor M Variable overhead 0.15 Fixed overhead 0.20 Total cost per unit $0.65 (a) (b) Your answer is correct. What were Metlock's total fixed costs? If the average selling price was $2.10, how much gross margin did the company generate? Gross margin Total fixed costs $ $0.15 0.15 Fixed costs eTextbook and Media Total cost per unit Gross margin $ Save for Later If Metlock incurs exactly the same total fixed costs but produces and sells only 1,600,000 notebooks this coming year, what happens to the fixed cost per unit? In turn, what would the total cost per unit be? If the average selling price stays at $2.10, how much gross margin would be earned? (Round per unit answers to 2 decimal places, e.g. 15.25.) eTextbook and Media 400000 2900000 Increased ✓ by $ $ $ per unit Attempts: 1 of 3 used per unit Attempts: 0 of 3 used Submit Answer

FINANCIAL ACCOUNTING
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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The salespeople at Metlock, a notebook manufacturer, commonly pressured operations managers to keep costs down so the company could give bigger discounts to large customers. Richard, the operations supervisor, leaked the $0.65 total unit cost to salespeople, who were thrilled, since that was slightly lower than the previous year's unit cost. Budgets were not yet finalized for the upcoming year, so it was unclear what the target unit cost would be. Richard knew the current year's operating capacity was two million notebooks, and Metlock produced and sold just that many. The detailed breakdown of the $0.65 total unit cost is as follows. Direct material Direct labor Variable overhead Fixed overhead Total cost per unit (a) (b) Total fixed costs Gross margin Your answer is correct. What were Metlock's total fixed costs? If the average selling price was $2.10, how much gross margin did the company generate? $0.15 Fixed costs 0.15 Total cost per unit 0.15 Gross margin 0.20 $0.65 Save for Later eTextbook and Media $ $ If Metlock incurs exactly the same total fixed costs but produces and sells only 1,600,000 notebooks this coming year, what happens to the fixed cost per unit? In turn, what would the total cost per unit be? If the average selling price stays at $2.10, how much gross margin would be earned? (Round per unit answers to 2 decimal places, e.g. 15.25.) Increased e Textbook and Media 400000 2900000 ✓ by $ $ $ per unit Attempts: 1 of 3 used per unit Attempts: 0 of 3 used Submit Answer
Transcribed Image Text:The salespeople at Metlock, a notebook manufacturer, commonly pressured operations managers to keep costs down so the company could give bigger discounts to large customers. Richard, the operations supervisor, leaked the $0.65 total unit cost to salespeople, who were thrilled, since that was slightly lower than the previous year's unit cost. Budgets were not yet finalized for the upcoming year, so it was unclear what the target unit cost would be. Richard knew the current year's operating capacity was two million notebooks, and Metlock produced and sold just that many. The detailed breakdown of the $0.65 total unit cost is as follows. Direct material Direct labor Variable overhead Fixed overhead Total cost per unit (a) (b) Total fixed costs Gross margin Your answer is correct. What were Metlock's total fixed costs? If the average selling price was $2.10, how much gross margin did the company generate? $0.15 Fixed costs 0.15 Total cost per unit 0.15 Gross margin 0.20 $0.65 Save for Later eTextbook and Media $ $ If Metlock incurs exactly the same total fixed costs but produces and sells only 1,600,000 notebooks this coming year, what happens to the fixed cost per unit? In turn, what would the total cost per unit be? If the average selling price stays at $2.10, how much gross margin would be earned? (Round per unit answers to 2 decimal places, e.g. 15.25.) Increased e Textbook and Media 400000 2900000 ✓ by $ $ $ per unit Attempts: 1 of 3 used per unit Attempts: 0 of 3 used Submit Answer
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