The Cost Structure of Sackville Manufacturing Company (SMC)at Two Levels

question 111

Essay

The cost structure of Sackville Manufacturing Company (SMC)at two levels of production is as follows:
$\begin{array}{|l|r|r|}\hline \text { Units } & 60,000 & 80,000 \\\hline \text { Costs: } & \\\hline \text { Direct materials } & \$ 120,000& \$ 160,000 \\\hline \text { Direct labour } & 90,000 & 120,000 \\\hline \text { Factory overhead } & 216,000 & 248,000 \\\hline \text { Total costs } & \$ 426,000 & \$ 528,000 \\\hline \text { Average cost per unit } & \$ 7.10& \$ 6.60\\\hline\end{array}$
Required:
a.Classify and explain each production cost as either strictly variable or strictly fixed or mixed
b.Determine the total production cost equation for SMC,using the units of production as the cost driver.(Be sure to identify clearly all the separate components of the equation.)
c.Explain what causes the drop in average cost per unit from $7.10 to $6.60 when production is increased from 60,000 to 80,000 units.Show all supporting calculations.

Identify and challenge common misconceptions about positive reinforcement in management.

Recognize the consequences of maintaining a positive persona in the workplace.

Develop strategies for transforming a negative work environment into a positive, high-morale one.

Design incentive programs that reward both team and individual performance without fostering detrimental competition.

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Definitions:

Consumer Taste

Refers to the preferences, likes, and dislikes of customers that influence their buying behavior.

Behavioural Management Approaches

These approaches focus on understanding and influencing employee behavior through various techniques and strategies.

Labour Laws

Regulations that govern the relationship between workers, employers, trade unions, and the government, including aspects such as wages, working hours, and workplace safety.

Quality Management

The act of overseeing all activities and tasks needed to maintain a desired level of excellence in a business’s products, services, and processes.