Reference no: EM131867495
Problem - Robotics Inc. assembles solar cells in a highly automated environment with a JIT inventory system. The manufacturing plant occupies 50% of the total buildings and grounds. Robotics has a small highly skilled and Fexible labor force that has a lifetime employment guarantees. ±actory supplies are used in the production of solar cells. About 25% of the plant's utility costs represent connection charges; the rest vary with production. External vendors provide all of the materials and supplies. Sales force is paid entirely on commissions. Advertising spending is set by contract at the beginning of the year. At full capacity, the plant is capable of producing 100,000 units per year. Last year Robotics manufactured and sold 94,000 units for the costs listed below.
Cost Item Amount
Direct Materials & Parts $300,000
Direct Labor 350,000
Production Supervisory Salaries 100,000
Factory Supplies 200,000
Plant Utilities 60,000
Sales Commissions 350,000
Building/Grounds Maintenance 40,000
Advertising 100,000
Administrative Salaries 400,000
Total $190,000
The total variable costs last year were: $690,000 $910,000 $895,000 $850,000
Robotics Inc. assembles solar cells in a highly automated environment with a JIT inventory system. The manufacturing plant occupies 50% of the total buildings and grounds. Robotics has a small highly skilled and Fexible labor force that has a lifetime employment guarantees. ±actory supplies are used in the production of solar cells. About 25% of the plant's utility costs represent connection charges; the rest vary with production. External vendors provide all of the materials and supplies.
Sales force is paid entirely on commissions. Advertising spending is set by contract at the beginning of the year. At full capacity, the plant is capable of producing 100,000 units per year. Last year Robotics manufactured and sold 94,000 units for the costs listed below.
Cost Item Amount
Direct Materials & Parts $300,000
Direct Labor 350,000
Production Supervisory Salaries 100,000
Factory Supplies 200,000
Plant Utilities 60,000
Sales Commissions 350,000
Building/Grounds Maintenance 40,000
Advertising 100,000
Administrative Salaries 400,000
Total $190,000
Assume that the full cost per unit was as follows:
Variable costs $10.00
Fixed costs 11.00
Total cost per unit $21.00
What is the average full cost per unit if next year the production falls to 86,000 units and there is no change in the unit prices of all cost inputs used by Robotics?
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