Question

Paints makes and sells paint to home improvement stores. ColtonColton​'s only plant can produce up to 1212 million cans of paint per year. Current annual production is 99 million cans. Fixed​ manufacturing, selling, and administrative costs total $ 19.8$19.8 million per year. The variable cost of making and selling each can of paint is $ 5.50$5.50. Stockholders expect a 1515​% annual return on the​ company's $ 43$43 million of assets. Read the requirements LOADING.... Requirement 1. What is ColtonColton​'s current total cost of making and selling 99 million cans of​ paint? What is the current cost per can of​ paint? Select the formula labels and enter the amounts to calculate ColtonColton​'s current total cost and current cost per can of paint. ​(Enter currency amounts in​ dollars, not in millions. Enter unit values as whole​ numbers, not in millions. Round all currency amounts to the nearest whole dollar and round the cost per unit to the nearest​ cent, $X.XX.) Plus: Divided by: Total cost per unit

Answer 1

Answer: Total cost = $564,300,000

Total cost per unit = $5.7

Explanation:

Given that,

Fixed​ manufacturing, selling and administrative costs = $19.8 million per year

Variable cost of making and selling each can of paint = $5.50

company's assets = $ 43 million

Annual return on company's assets = 15%

(1) Units produce =  99 million cans of​ paint

Variable cost = variable cost of each can × No. of units selling and making

                      = $5.50 × 99,000,000

                      = $544,500,000

Total cost = Variable cost + Fixed cost

                 = $544,500,000 + $19,800,000

                 = $564,300,000

(2)

$Total\ Cost\ per\ unit=\frac{Total\ cost}{Units\ produce}$

$Total\ Cost\ per\ unit=\frac{564,300,000}{99,000,000}$

                                         = $5.7 per unit