Question

Cactus Cookies incurred the following costs this month to manufacture 1,000 jumbo chocolate chip cookies.

Chocolate chips $ 59.00
Flour $ 41.00
Butter $ 62.50
Sugar $ 32.00
Other ingredients $ 34.00
Labor wages $ 400.00
Rent on manufacturing space $ 350.00
Utilities (paid at a fixed monthly rate) $ 58.00
Depreciation on kitchen equipment $ 89.00


Calculate each of the following:

a. The total variable cost this month. (Round your answer to 2 decimal places.)



b. The total fixed cost this month.



c. The variable cost per cookie this month. (Round your answer to 4 decimal places.)



d. The fixed cost per cookie this month. (Round your answer to 2 decimal places.)



e. The total variable cost if Cactus Cookies had manufactured 2,000 cookies this month. (Do not round your intermediate calculations.)



f. The total fixed cost if Cactus Cookies had manufactured 2,000 cookies this month.



g. The variable cost per cookie if Cactus Cookies had manufactured 2,000 cookies this month. (Round your answer to 4 decimal places.)




h. The fixed cost per cookie if Cactus Cookies had manufactured 2,000 cookies this month. (Round your answer to 3 decimal place)

Answer 1

Explanation:

a. The total variable cost this month :

Chocolate chips = $59.00

Flour = $41.00

Butter = $62.50

Sugar = $32.00

Other ingredients = $34.00

Labor wages = $400.00

Total variable cost this month = (59+41+62.50+32+34+400)

= $628.50

b. The total fixed cost this month :

Rent on manufacturing space = $350.00

Utilities = $58.00

depreciation on kitchen equipment = $89.00

Total fixed cost this month = (350+58+89)

= $497

c. The variable cost per cookie this month :

Total variable cost per cookie this month =
`\frac{\text{total variable cost}}{\text{total number of cookies}}`

=
`(628.50)/(1000)`

= $0.6285

d. The fixed cost per cookie this month :

Total fixed cost = $497

Total number of cookies = 1000

Total fixed cost per cookies =
`\frac{\text{total fixed cost}}{\text{total number of cookies}}`

=
`(497)/(1000)`

= 0.497 ≈ $0.5

e. The total variable cost if 2000 cookies this month :

Variable cost per cookie = $0.6285

so, total variable cost for 2000 cookies = (0.6285 × 2000)

= $1257

f. Total fixed cost if 2000 cookies :

Total fixed cost would be same even if 1000 cookies or 2000 cookies. because fixed cost is incurred irrespective of the number of the unit produced.

g. The variable cost per cookie for 2,000 cookies :

variable cost for 2000 cookies = $1,257

So variable cost per cookie =
`(1257)/(2000)`

= $0.6285

h. The fixed cost per cookie for 2000 cookie :

Fixed cost per unit foe 2000 cookie =
`(497)/(2000)`

= $0.2485

= $0.249