What would be the total cost of production of plants a and b

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Reference no: EM13239929

CHEMCO operates two plants, A and B, which produce the same product. The capacity of Plant A is 60,000 gallons while that of plant B is 80,000 gallons. The annual fixed cost of Plant A is $2,600,000 per year and the Variable cost is $32 per gallon. The corresponding values for Plant B are $2,800,000 and $39 per gallon. At present, Plant A is being operated at 35% of capacity and plant B is being operated at 40% of capacity.

a) What would be the total cost of production of Plants A and B?

b)What are the total cost and the average unit cost of the total output of both plants?

c)What would be the total cost to the company and cost per gallon if all production were transferred to plant A?

d)What would be the total cost to the company and cost per gallon if all production were transferred to Plant B?

Reference no: EM13239929

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