With things going well at the Surf Shop Jeremy has decided to help out a friend who owns the company
surf board that Jeremy sells in his shop. He has asked you to go spend sometime with Pacific Surfboards
them make some decisions about the future of their business.
Pacific Surfboards makes and sells surfboards, specifically the La Jolla Surfboard, to small surf shops along the Calif
following cost data for his current production levels. He is able to produce up to 2500 surfboards with the resource
Pacific Surfboards Cost Data
Direct Materials (per unit) $ 110
Direct Labor (per unit) $ 55
Indirect Materials (per unit) $ 11
Variable manufacturing overhead (per unit) $ 4
Fixed manufacturing overhead $ 10,000
Fixed selling & administrative expenses $ 12,500
Using the cost data from Pacific Surfboards, answer the following questions
A. If 1000 units were produced, what is the variable cost per unit?
Variable Cost per Unit, 1,000 Units
Direct Materials $ 110
Direct Labor $ 55
Indirect Materials $ 11
Variable manufacturing overhead $ 4
Variable Cost per Unit $ 180
B. If 2500 units were producted, what is the variable cost per unit?
Variable Cost per Unit, 2,500 Units
Direct Materials $ 110
Direct Labor $ 55
Indirect Materials $ 11
Variable manufacturing overhead $ 4
Variable Cost per Unit $ 180
C. Calculate the total variable costs for the manufacturing levels of 500, 750 & 1500 units
, Number of Total Variable
Variable Cost per Surfboards Cost of
Surfboard Manufactured Surfboard
$ 180 500 $ 90,000
$ 180 750 $ 135,000
$ 180 1500 $ 270,000
D. Calculate the total manufacturing overhead costs for the manufacturing levels of 800, 1600 & 2500
Number of Total
Manufacturing Surfboards Manufacturing
Overhead per Unit Manufactured Overhead
$ 4 800 $ 3,200
$ 4 1600 $ 6,400
$ 4 2500 $ 10,000
E. The fixed expenses total $22,500 per month. Regardless of whether the company produces and sells any surfboa
these costs. Pacific Surfboards want to figure out what his average fixed cost per surfboard is at the manufacturing
units
Number of Average Fixed
Surfboards Cost per
Monthly Fixed Costs Manufactured Surfboard
$ 22,500 500 $ 45
$ 22,500 750 $ 30
$ 22,500 1500 $ 15
The La Jolla model sells for $250 and has a per-unit variable cost of $180 associated with its production
expenses of $22,500 per month. In August the company sold 425 of the La Jolla surfboards.
F. Calculate the contribution margin per unit for the La Jolla Surfboard
Contribution Margin Per Unit
Sales Price per Unit $ 250
Variable costs per unit $ 180
surf board that Jeremy sells in his shop. He has asked you to go spend sometime with Pacific Surfboards
them make some decisions about the future of their business.
Pacific Surfboards makes and sells surfboards, specifically the La Jolla Surfboard, to small surf shops along the Calif
following cost data for his current production levels. He is able to produce up to 2500 surfboards with the resource
Pacific Surfboards Cost Data
Direct Materials (per unit) $ 110
Direct Labor (per unit) $ 55
Indirect Materials (per unit) $ 11
Variable manufacturing overhead (per unit) $ 4
Fixed manufacturing overhead $ 10,000
Fixed selling & administrative expenses $ 12,500
Using the cost data from Pacific Surfboards, answer the following questions
A. If 1000 units were produced, what is the variable cost per unit?
Variable Cost per Unit, 1,000 Units
Direct Materials $ 110
Direct Labor $ 55
Indirect Materials $ 11
Variable manufacturing overhead $ 4
Variable Cost per Unit $ 180
B. If 2500 units were producted, what is the variable cost per unit?
Variable Cost per Unit, 2,500 Units
Direct Materials $ 110
Direct Labor $ 55
Indirect Materials $ 11
Variable manufacturing overhead $ 4
Variable Cost per Unit $ 180
C. Calculate the total variable costs for the manufacturing levels of 500, 750 & 1500 units
, Number of Total Variable
Variable Cost per Surfboards Cost of
Surfboard Manufactured Surfboard
$ 180 500 $ 90,000
$ 180 750 $ 135,000
$ 180 1500 $ 270,000
D. Calculate the total manufacturing overhead costs for the manufacturing levels of 800, 1600 & 2500
Number of Total
Manufacturing Surfboards Manufacturing
Overhead per Unit Manufactured Overhead
$ 4 800 $ 3,200
$ 4 1600 $ 6,400
$ 4 2500 $ 10,000
E. The fixed expenses total $22,500 per month. Regardless of whether the company produces and sells any surfboa
these costs. Pacific Surfboards want to figure out what his average fixed cost per surfboard is at the manufacturing
units
Number of Average Fixed
Surfboards Cost per
Monthly Fixed Costs Manufactured Surfboard
$ 22,500 500 $ 45
$ 22,500 750 $ 30
$ 22,500 1500 $ 15
The La Jolla model sells for $250 and has a per-unit variable cost of $180 associated with its production
expenses of $22,500 per month. In August the company sold 425 of the La Jolla surfboards.
F. Calculate the contribution margin per unit for the La Jolla Surfboard
Contribution Margin Per Unit
Sales Price per Unit $ 250
Variable costs per unit $ 180
