Using the annual cost data below, if industry considering producing 7,500 units per year, determine which project incurs less cost. v) Description Capital (RO) Life (years) Capacity (units per year) Salaries per year (RO) Other fixed costs per year (RO) Wages per year (RO) Cost of materials per year (RO) Other variable costs per year (RO) Scrap value at the end of the year (RO) Cost of capital (%) Project-A 355,000 15 Project-B 450,200 15 10,000 45,000 40,000 70,000 229,000 35,000 31,700 15 12,000 50,000 85,000 80,000 279,000 40,000 43,700 15

Using the annual cost data below, if industry considering producing 7,500 units per year, determine which project incurs less cost. v) Description Capital (RO) Life (years) Capacity (units per year) Salaries per year (RO) Other fixed costs per year (RO) Wages per year (RO) Cost of materials per year (RO) Other variable costs per year (RO) Scrap value at the end of the year (RO) Cost of capital (%) Project-A 355,000 15 Project-B 450,200 15 10,000 45,000 40,000 70,000 229,000 35,000 31,700 15 12,000 50,000 85,000 80,000 279,000 40,000 43,700 15

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter3: Cost Behavior And Cost Forecasting

Section: Chapter Questions

Problem 8DQ: Describe the cost formula for a strictly fixed cost such as depreciation of 15,000 per year.

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