Final answer:
The amount a company should budget for the production of a single unit of a product is shown on a standard cost card, which is vital for managing production costs and scales.
Step-by-step explanation:
The amount a company should spend to produce a single unit of product based on expected production and sales is shown on a standard cost card. This card helps a company in budgeting and cost control by detailing the direct materials, direct labor, and manufacturing overhead required to produce one unit of product.
Knowing these costs is crucial for setting product prices, estimating potential profits, and achieving economies of scale. Firms with large-scale production, like Plant L producing 150 units with a cost of $10 per toaster oven, can often spread their fixed costs over a larger number of units, reducing the average cost of production.
Understanding these cost elements is also important for comparing efficiency across different production scales, as illustrated in the various examples involving toaster oven plants. These comparisons can highlight stages where increasing production volume does not result in lower costs per unit, which is the case with Plant V having the same unit cost as Plant L despite a larger output. Such insights help businesses optimize their production processes and remain competitive.