Please show all the formulas used and the calculations and not only an excel tab

Question

Please show all the formulas used and the calculations and not only an excel table

7.5 Bragg & Stratton Company manufactures a specialized motor for chainsaws. The company expects to manufacture and sell 30,000 motors in 2010. It can manufac- ture an additional 10,000 motors without adding new machinery and equipment. Bragg & Stratton's projected total costs for the 30,000 units are as follows: Direct materials Direct labour Manufacturing overhead: $150,000 300,000 Variable portion Fixed portion 100,000 80,000 Selling and administrative costs: Variable portion Fixed portion 180,000 70,000 The selling price for the motor is S80. (a) What is the total manufacturing cost per unit if 30,000 motors are produced? (b) What is the total manufacturing cost per unit if 40,000 motors are produced? (c) What is the break-even price on the motors? (Note: For (c), suppose 30,000 motors are produced)

Explanation / Answer

7.5

A.

If 30000 motors are produced:

Total manufacturing cost per unit = (total fixed cost + total variable cost)/30000

Total manufacturing cost per unit = ((80000+70000) + (150000+300000+100000+180000))/30000

Total manufacturing cost per unit = $29.33

B.

If 40000 motors are produced:

Direct material cost per unit = 150000/30000 = $5

Direct labor cost per unit = 300000/30000 = $10

Variable manufacturing overhead per unit = 100000/30000 = $3.33

Variable selling & admin cost per unit = 180000/30000 = $6

So,

Total manufacturing cost per unit = (total fixed cost)/40000 + (Direct material cost per unit+ Direct labor cost per unit+ Variable manufacturing overhead per unit+ Variable selling & admin cost per unit)

Total manufacturing cost per unit = (80000+70000)/40000 + (5+10+3.33+6)

Total manufacturing cost per unit = $28.08

C.

Let, breakeven price is X.

30000 = total fixed cost/(X – variable cost per unit)

30000 = (70000+80000)/(X-24.33)

X = 24.33 + 150000/30000

X = $29.33

So, breakeven price on the motors (for 30000 units) is $29.33.

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