Newman's manufacturing costs for specialty salad dressings over the last 12 months include various components of manufacturing overhead, which typically encompass expenses such as utilities, rent, and indirect labor. These costs are essential for calculating the total cost of production and determining pricing strategiesTotal cases produced Total Manufacturing Overhead
January 2,800 $186,000.00
February 2,700 179,000
March 2,900 192,500
April 3,300 218,500
May 3,200 212,000
June 3,100 206,000
July 2,700 179,500
August 3,100 205,500
September 2,800 186,000
October 2,200 147,000
November 2,700 178,500
December 2,800 186,000
a: use the information from the high and low volume months to develop a cost-estimating equation for monthly manufacturing costs.
b. what is the average cost per unit on the high and low volume month. what causes the difference (if any?)
c>The company plans a significant investment in new equipment next year that will increase capacity from 3,500 cases to 6,000 cases per month. as a result , fixed costs will increase to 20,000 per month. additionally , the company expects (1) unit variable direct materials to increase by 10%due to rising prices. (2) unit varible manufacturing overhead costs to remain unchanged. assume that for the last 12-months, variable costs were made up of folowing components: direct mateiral(20%), direct labor (50%) and manufacturing overhead(30%) 1. estimate costs for a month using the estimating equation from part (a) at a production level of 6,000 cases. 2. estimate costs for a month applying the the chnages in costs described above at a production level of 6,000 cases. d. detetermin the difference between total manufacturing costs and average cost per unit using the original and revised estimating equations from part c. what causes the difference in the results? e.other than the price update described in part c, what other issues cause the original estimating equation to be accurate to predict costs in the following year?