Explore BrainMass

Explore BrainMass

    Relevant Cost Decisions Cellular Modems

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    The Svenson Corporation manufactures cellular modems. It manufactures its own cellular modem circuit boards (CMCB), an important part of the cellular modem. It reports the following cost information about the costs of making CMCBs in 2003 and the expected costs in 2004:

    Current Costs Expected Costs
    in 2003 in 2004

    Variable
    manufacturing costs:

    Direct material cost
    per CMCB_____________________$180__________$170_______

    Direct manufacturing labor
    cost per CMCB_________________50____________45________

    Variable manufacturing cost
    per batch for setups,
    material handling, and
    quality control_____________1,600_________1,500_______

    Fixed manufacturing cost:

    Fixed manufacturing overhead
    costs that can be avoided if
    CMCBs are not made__________320,000______320,000______

    Fixed manufacturing overhead
    costs of plant depreciation,
    insurance, and administration
    that cannot be avoided even
    if CMCBs are not made_______800,000______800,000______

    Svenson manufactured 8,000 CMCBs in 2003 in 40 batches of 200 each. In 2004, Svenson anticipates need
    ing 10,000 CMCBs. The CMCBs would be needed in 80 batches of 125 each.

    The Minton Corporation has approached Svenson about supplying CMCBs to Svenson in 2004 at $300 per
    CMCB on whatever delivery schedule Svenson wants.

    Calculate the total expected manufacturing cost per unit of making CMCBs in 2004.

    © BrainMass Inc. brainmass.com March 4, 2021, 5:57 pm ad1c9bdddf
    https://brainmass.com/business/management-accounting/relevant-cost-decisions-cellular-modems-20586

    Solution Preview

    Total Expected Manufacturing Cost per unit of CMCB in 2004:

    Direct material cost
    per CMCB + Direct manufacturing
    labor cost per CMCB ...

    Solution Summary

    The expert examines relevant cost decisions for cellular modems. The important parts of the cellular modem is given.

    $2.19

    ADVERTISEMENT