United Motors specializes in producing one specialty vehicle. Itis called Surfer and is styled to easily fit multiple surfboards inits back area and? top-mounted storage racks.
United has the following manufacturing? costs:
United currently produces 180 vehicles per month
| Plant management? costs, $1,728,000 per year |
| Cost of leasing? equipment, $2,856,000 per year |
| ?Workers' wages, $800 per Surfer vehicle produced |
| Direct materials? costs: Steel, $1,600 per? Surfer; Tires, $150 per? tire, each Surfer takes 5 tires? (one spare) |
City? license, which is charged monthly based on the number oftires used in? production: |
| ?0-500 tires | $70,000 |
| ?501-1,000 tires | $80,000 |
| more than? 1,000 tires | $230,000 |
Requirements
1. | What is the variable manufacturing cost per? vehicle? What isthe fixed manufacturing cost per? month? |
2. | Plot a graph for the variable manufacturing costs and a secondfor the fixed manufacturing costs per month. How does the conceptof relevant range relate to your? graphs? Explain. |
3. | What is the total manufacturing cost of each vehicle if 95vehicles are produced each? month? 220 vehicles? How do you explainthe difference in the manufacturing cost per? unit? |
