What is the average full cost per unit

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Question - 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 flexible labor force that has a lifetime employment guarantees. Factory 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

Required - What is the average full cost per unit if next year the production fails to 86,000 units and there is no change in the unit prices of all cost inputs used by Robotics?

$22.02

$21.00

$20.21

$22.95

Reference no: EM131872184

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