The rank of product lines from lowest to highest in terms of
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Answer to Problem 139P
The correct option is
Explanation of Solution
Given:
Data | Line 1 | Line 2 | Line 3 | Line 3 |
Annual production | ||||
Cost of direct materials | ||||
Cost of direct labor |
Calculation:
Write the expression to calculate the direct cost of product lines.
Here, the direct cost is DC.
Substitute
Substitute
Substitute
Substitute
Write the expression to calculate total cost for line 1.
Here, the total cost is TC.
Substitute
Write the expression to calculate the manufacturing cost per unit for line 1.
Here, the average cost is AC.
Substitute,
Write the expression to calculate total cost for line 2.
Substitute
Write the expression to calculate the manufacturing cost per unit for line 2.
Substitute
Write the expression to calculate total cost for line 3.
Substitute
Write the expression to calculate the manufacturing cost per unit for line 3.
Substitute
Write the expression to calculate total cost for line 4.
Substitute
Write the expression to calculate the manufacturing cost per unit for line 4.
Substitute
The product lines are ranked on the basis of average cost from lowest to highest.
Conclusion:
Therefore, the correct option is
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Chapter D Solutions
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