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 1,800 Variable expenses: Direct materials Direct labour (1 hour per installation) Indirect materials $ 370,800 48,600 25,200 Fixed expenses: Installation supervisor\'s wages Installation scheduler\'s wages Warehouse expenses $ 16,200 12,600 18,000

Solution

2) Item Amount August total cost per unit Variable expenses: Direct Materials 412000 206 Direct labor 54000 27 Indirect materials 28000 14 Fixed expenses: Installation supervisor\'s wages 16,200 8.1 Installation scheduler\'s wages 12,600 6.3 Warehouse expenses 18,000 9 (variable cost per unit does not change with change in units;Fixed costs does not change in total hence per unit cost increases with increase in output) 3) Factors Direct materials costs per unit could decrease if quantity discounts are received from the manufacturer for larger order quantities direct material costs could increase if quantity discounts currently being received are lost if order quantities decrease significantly Direct labor costs per unit could increase if activity level increase and installations have to be compeleted using more expensive overtime hour direct labor costs per unit could increase if activity levels decrease and less experienced , and lower paid ,intallers are laid off direct labor 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)