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XYZ Company produces Models X, Y, and Z. Model X incurs $50,000 in labor costs and $60,000 in direct material costs. XYZ Company also incurs fixed costs for rent in the amount of $500,000, quality control in the amount of $1 million, and human resources in the amount of $600,000.

The company allocates rent based on the space allocated to each product line. The total amount of occupied space is 500,000 square feet of which Model X occupies 50,000 square feet. The company allocates quality control expenses based upon the number of inspections. The company had a total of 200,000 inspections of which Model X has had 10,000 inspections. The company allocates human resource expenses based upon the number of employees in each department. The company has 30 employees of which 5 employees are employed for the Model X product line. The company expects to produce 100,000 units of Model X. What is the cost per unit to produce Model X given the company's variable and fixed costs?

A) $31

B) $32

C) $35

D) $40

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M942218

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