Grand-Cola spends $0.50 on direct materials, direct labour, and variable manufacturing overhead for every unit...
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Grand-Cola spends $0.50 on direct materials, direct labour, and variable manufacturing overhead for every unit (12-pack of soda) it produces. Fixed manufacturing overhead costs $7 million per year. The plant, which is currently operating at only 65% of capacity, produced 25 million units this year. Management plans to operate closer to full capacity next year, producing 35 million units. Management does not anticipate any changes in the prices it pays for materials, labour, and manufacturing overhead. Requirements Requirement a. What is the current total product cost (for the 25 million units), including fixed and variable costs? Determine the formula, then calculate the current total product cost. + = Total product costs million + million million
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