Gavin's Glassworks makes glass flanges for scientific use. Materials cost $3 per flange, and the...
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Accounting
Gavin's Glassworks makes glass flanges for scientific use. Materials cost $3 per flange, and the glass blowers are paid a wage rate of $24 per hour. A glass blower blows 10 flanges per hour. Fixed manufacturing costs for flanges are $22,000 per period. Period (nonmanufacturing) costs of flanges are $19,000 per period, and are fixed.
Requirements
| 1. | Graph the fixed, variable, and total manufacturing cost for flanges, using units (number of flanges) on the x-axis (the horizontal axis). |
| 2. | Assume Gavin's Glassworks manufactures and sells 8,000 flanges this period. Its competitor, Flora's Flasks, sells flanges for $9.75 each. Can Gavin sell below Flora's price and still make a profit on the flanges? |
| 3. | How would your answer to requirement 2 differently if Gavin's Glassworks made and sold 11,000 flanges this period? Why? What does this indicate about the use of unit cost in decision making? |
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