COMMERCE 2AB3 Lecture Notes - Lecture 17: Variable Cost, Fixed Cost
Document Summary
This year"s expected production is 10,000 toy cars. Hotweels" accounting report provides the following cost information based on the production of. Fixed costs of plant administration, taxes, and insurance. * inspection, setup, and materials handling costs vary with the number of batches in which the. Hotweels typically produces the cars in batch sizes of 500 units. Hotweels has received an offer from an outside vendor to supply hotweels with any number of toy cars that hotweels requires at per toy car. If the toy cars are purchased from outside, the facilities where the toy cars are currently made will be used to upgrade the toy cars by adding a motor to them. As a consequence, the selling price on the toy cars will be raised by . The variable cost per unit of the upgrade would be , and additional tooling costs of ,000 would be incurred. ,000 fixed cost of upgrade (,000) additional income from upgrade.
