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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Big Thumbs Company manufactures portable flash drives for computers. Big Thumbs incurs monthly depreciation costs of $15,200 on its plant equipment. Also, each drive requires materials and manufacturing overhead resources. On average, the company uses 17,500 ounces of materials to manufacture 7,000 flash drives per month. Each ounce of material costs $3.00. In addition, manufacturing overhead resources are driven by machine hours. On average, the company incurs $35,000 of variable manufacturing overhead resources to produce 7,000 flash drives per month.Required:
1. Create a formula for the monthly cost of flash drives for Big Thumbs.
2. If the department expects to manufacture 6,000 flash drives next month, what is the expected fixed cost (assume that 6,000 units is within the company’s current relevant range)? Total variable cost? Total manufacturing cost (i.e., both fixed and variable)?
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