K-Too Everwear Corporation can manufacture mountain climbing shoes for $25.95 pe
ID: 2736310 • Letter: K
Question
K-Too Everwear Corporation can manufacture mountain climbing shoes for $25.95 per pair in variable raw material costs and $17.20 per pair in variable labor expense. The shoes sell for $156 per pair. Last year, production was 120,000 pairs. Fixed costs were $1,270,000. What were total production costs? (Do not round intermediate calculations. Round your answer to the nearest whole number, e.g., 32.) Total production cost $ What is the marginal cost per pair? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) Marginal cost per pair $ What is the average cost per pair? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.) Average cost per pair $ If the company is considering a one-time order for an extra 4,000 pairs, what is the minimum acceptable total revenue from the order? (Do not round intermediate calculations. Round your answer to the nearest whole number, e.g., 32.) Total revenue $
Explanation / Answer
1.
The total costs include all variable costs and fixed costs. We need to make sure we are including all variable costs for the number of units produced, so:
2.
The marginal cost, or cost of producing one more unit, is the total variable cost per unit, so:
3.
The total costs include all variable costs and fixed costs. We need to make sure we are including all variable costs for the number of units produced, so:
Total costs = (25.95+17.29)(120,000) + $1,270,000 Total production costs = $6,448,000Related Questions
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