Question

Urban Auto Glass specializes in the repair and replacement of windshields for passenger vehicles. Variable and fixed costs related to installation activities for the most recent month (July) are listed below.

Item
Number of windshields installed		1,850
Variable expenses:
Direct materials	$	382,950
Direct labour (1 hour per installation)		62,900
Indirect materials		27,750
Fixed expenses:
Installation supervisor’s wages	$	18,500
Installation scheduler’s wages		14,800
Warehouse expenses		20,350

Required:

1. Calculate the per unit amounts for each of the variable expense and fixed expense items in July.

2. Management expects that 2,050 windshields will be installed in August and that this level of activity is within the relevant range for all variable and fixed expenses.

a&b-1. Calculate the total expense and per unit amounts for each of the variable and fixed cost items above. (Round "per unit" answers to 2 decimal places.)

b-2. Not available in Connect.

3. Identify some factors that might cause variable costs per unit to change if the actual level of activity in a given month falls above or below the relevant range. (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)

• Direct material costs per unit could decrease if quantity discounts are received from the manufacturer for larger order quantities.unanswered
• Direct material costs could increase if quantity discounts currently being received are lost if order quantities decrease significantly.unanswered
• Direct labour costs per unit could increase if activity levels increase and installations have to be completed using more expensive overtime hours.unanswered
• Direct labour costs per unit could increase if activity levels decrease and less experienced, and lower paid, installers are laid off.unanswered
• Direct labour costs per unit could decrease as the number of installations increases due to the effects of learning (i.e., the time required for each installation may decrease with experience).unanswered
• Direct material costs per unit could increase if quantity discounts are received from the manufacturer for larger order quantities.unanswered
• Direct material costs could decrease if quantity discounts currently being received are lost if order quantities decrease significantly.unanswered

Next

Answer 1

Answer ;-

1.

Item
Variable expenses:	Amount($)	July activity($)	per unit($)
Direct materials	382,950	1,850	207
Direct labor	62,900	1,850	34
Indirect materials	27,750	1,850	15
Fixed expenses:
Installation supervisor's wages	18,500	1,850	10
Installation scheduler's wages	14,800	1,850	8
Warehouse expenses	20,350	1,850	11

2a &b.

Item	(a)	(b)	c	c/a
Variable expenses:	August activity($)	July per unit($)	August total cost($)	August per unit($)
Direct materials	2,050	207	424,350	207
Direct labor	2,050	34	69,700	34
Indirect materials	2,050	15	30,750	15
Fixed expenses:
Installation supervisor's wages	2,050	n/a	18,500.00	9.02
Installation scheduler's wages	2,050	n/a	14,800.00	7.22
Warehouse expenses	2,050	n/a	20,350.00	9.93