Chp. 11, #2 K-Too Everwear Corporation can manufacture mountain climbing shoes f
ID: 2738691 • Letter: C
Question
Chp. 11, #2
K-Too Everwear Corporation can manufacture mountain climbing shoes for $32.10 per pair in variable raw material costs and $23.05 per pair in variable labor expense. The shoes sell for $148 per pair. Last year, production was 150,000 pairs. Fixed costs were $1,210,000.
What is the marginal cost per pair? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)
What is the average cost per pair? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)
If the company is considering a one-time order for an extra 8,000 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.)
What were total production costs? (Do not round intermediate calculations. Round your answer to the nearest whole number, e.g., 32.)
Explanation / Answer
a) Total Production Cost = (32.10 + 23.05 ) * 150000 + 1210000
= 8272500 + 1210000
= $ 9482500
b) The marginal cost per pair = 32.10 + 23.05
= $ 55.15 per pair of shoes.
c) The average cost per pair = Total Cost / Number of shoes manufactured
= 9482500 / 150000
= $ 63.22 (approx)
d) If the company is considering a one-time order for an extra 8,000 pairs then the minimum acceptable total revenue from the order = (32.10 + 23.05 ) * 8000 = $ 441200.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.