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Question - Sony manufacturing produces and sells DVD players. The selling price for a DVD player is $840. Direct material is $280 per each DVE. The company pay $20 per direct labor hour and each unit requires 2.5 direct labor hours. Total overhead costs for the past 12 months are as follows:
Month
Machine Hours
Manufacturing Overhead Cost ($)
January
115
107,670
February
215
137,990
March
205
124,570
April
220
126,500
May
245
137,650
June
140
112,400
July
160
120,650
August
125
108,200
September
110
117,400
October
135
114,200
November
155
116,700
December
115,760
Required -
1. Using the high-low method, what is the variable cost per machine hours?
2. What is the fixed component of overhead manufacturing costs?
3. Write overhead cost function and revenue functions based on your answer in question #1, #2, and information given.
4. The company use 1200 machine hours to produce 1500 DVDs. Given all information the above, write a cost function of for DVD and draw a graph to show the breakeven point.
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