60.1K

Verified Solution

Link Copied!

Newman's manufacturing costs for specialty salad dressings over the last $12$ months include various components of manufacturing overhead, which typically encompass expenses such as utilities, rent, and indirect labor. These costs are essential for calculating the total cost of production and determining pricing strategiesTotal cases produced Total Manufacturing Overhead

January $2,800$ $$186,000\mathrm{.}00$

February $2,700179,000$

March $2,900192,500$

April $3,300218,500$

May $3,200212,000$

June $3,100206,000$

July $2,700179,500$

August $3,100205,500$

September $2,800186,000$

October $2,200147,000$

November $2,700178,500$

December $2,800186,000$

a: use the information from the high and low volume months to develop a cost$-$estimating equation for monthly manufacturing costs.

b$.$ what is the average cost per unit on the high and low volume month. what causes the difference $($if any?$)$

c$>$The company plans a significant investment in new equipment next year that will increase capacity from $3,500$ cases to $6,000$ cases per month. as a result $,$ fixed costs will increase to $20,000$ per month. additionally $,$ the company expects $(1)$ unit variable direct materials to increase by $10\%$due to rising prices. $(2)$ unit varible manufacturing overhead costs to remain unchanged. assume that for the last $12-$months, variable costs were made up of folowing components: direct mateiral$(20\%),$ direct labor $(50\%)$ and manufacturing overhead$(30\%)1.$ estimate costs for a month using the estimating equation from part $($a$)$ at a production level of $6,000$ cases. $2.$ estimate costs for a month applying the the chnages in costs described above at a production level of $6,000$ cases. d$.$ detetermin the difference between total manufacturing costs and average cost per unit using the original and revised estimating equations from part c$.$ what causes the difference in the results? e$.$other than the price update described in part c$,$ what other issues cause the original estimating equation to be accurate to predict costs in the following year?

Answer & Explanation Solved by verified expert

See Answer