Reference no: EM131872184

Question - Robotics Inc. assembles solar cells in a highly automated environment with a JIT inventory system. The manufacturing plant occupies 50% of the total buildings and grounds. Robotics has a small highly skilled and flexible labor force that has a lifetime employment guarantees. Factory supplies are used in the production of solar cells. About 25% of the plant's utility costs represent connection charges; the rest vary with production. External vendors provide all of the materials and supplies. Sales force is paid entirely on commissions. Advertising spending is set by contract at the beginning of the year. At full capacity, the plant is capable of producing 100,000 units per year. Last year Robotics manufactured and sold 94,000 units for the costs listed below.

Cost Item	Amount
Direct Materials & Parts	$300,000
Direct Labor	350,000
Production Supervisory Salaries	100,000
Factory Supplies	200,000
Plant Utilities	60,000
Sales Commissions	350,000
Building/Grounds Maintenance	40,000
Advertising	100,000
Administrative Salaries	400,000
Total	$190,000

Assume that the full cost per unit was as follows:

Variable costs	$10.00
Fixed costs	11.00
Total cost per unit	$21.00

Required - What is the average full cost per unit if next year the production fails to 86,000 units and there is no change in the unit prices of all cost inputs used by Robotics?

$22.02

$21.00

$20.21

$22.95