Kleenaire Motors manufactures hybrid sports utility vehicles . Kleenaire incurs monthly depreciation costs of on its highly automated plant machinery and warehousing facility. Also, each requires materials and manufacturing overhead resources. On average, the company uses pounds of steel to manufacture per month. Each pound of steel costs . In addition, manufacturing overhead resources are driven by machine hours. On average, the company incurs of variable manufacturing overhead resources to produce per month.
Required:
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Create a formula for the monthly cost of for Kleenaire.
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If Kleenaire expects to manufacture next month, what is the expected fixed cost (assuming that units is within the company's current relevant range)? Total variable cost? Total manufacturing cost (i.e., both fixed and variable)?
Solution
VerifiedThis exercise requires us to develop a cost formula for the monthly cost of Kleenaire Motors company.