Urban Auto Glass specializes in the repair and replacement o

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 2,050 Variable expenses $420,250 65,600 26,650 Direct materials Direct labour (1 hour per installation) Indirect materials Fixed expenses Installation supervisor\'s wages Installation scheduler\'s wages Warehouse expenses $ 12,300 6,150 14,350 Requirea: 1. Calculate the per unit amounts for each of the variable expense and fixed expense items in July Per Unit Variable expenses Direct materials Direct labour (1 hour per installation) Indirect materials Fixed expenses Installation supervisor\'s wages Installation scheduler\'s wages Warehouse expenses

Solution

Solution:

Part 1 – Per Unit Amount

Item

Per Unit

Variable Expenses:

Direct materials (420250 / 2050)

$205

Direct labor (1 hour per installation) (65600/2050)

$32

Indirect materials (26,650 /2050)

$13

Fixed Expenses:

Installation supervisor\'s wages (12300 / 2050)

$6

Installation scheduler\'s wages (6150 / 2050)

$3

Warehouse expenses (14350 / 2050)

$7

Part 2 (a&b)-1—Total Expense and per unit amounts (Expected 2250 Windshields)

Before doing this part, we need to understand the definition and characteristics of Variable Cost and Fixed Cost.

Variable Cost

- Variable Cost/expenses are the cost which vary in totality with the volume of production.

- It can be traced directly with the output.

- Per Unit Variable Cost will remain same irrespective of volume of production.

Fixed Cost / Expenses

- Generally fixed expenses are incurred for a period.

- In totality, fixed expenses will remain same.

- Per Unit Fixed Expenses are changed as the volume increases or decreases.

- In case of increase in volume, the fixed expenses per unit decreases.

- In case of decrease in volume, fixed expenses per unit increased.

Item

August Total Cost

August Per Unit

Variable Expenses:

Direct materials (Total Cost = 2250 x 205)

$461,250

$205.00

Direct labor (1 hour per installation) (Total Cost = 2250 x 32)

$72,000

$32.00

Indirect materials (Total Cost = 2250*13)

$29,250

$13.00

Fixed Expenses:

Installation supervisor\'s wages (Per Unit Cost = 12300 / 2250)

12300

$5.47

Installation scheduler\'s wages (Per Unit Cost = 6150 / 2250)

6150

$2.73

Warehouse expenses (Per Unit Cost = 14350 / 2250)

14350

$6.38

Part 3 --- Some factors that might cause variable cost per unit to change as follows:

Line 1, Line 2 and Line 4 are some factors that might cause variable cost per unit to change.

Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you

Item	Per Unit
Variable Expenses:
Direct materials (420250 / 2050)	$205
Direct labor (1 hour per installation) (65600/2050)	$32
Indirect materials (26,650 /2050)	$13
Fixed Expenses:
Installation supervisor\'s wages (12300 / 2050)	$6
Installation scheduler\'s wages (6150 / 2050)	$3
Warehouse expenses (14350 / 2050)	$7