The segmenting model partitions the total estimation task into segments. Each se
ID: 1712806 • Letter: T
Question
The segmenting model partitions the total estimation task into segments. Each segment is estimated, then the segment estimates are combined for the total cost estimate.
Given the data below, use the segmenting model to estimate a manufacturer's average cost per unit produced. Note that this is different from the previous question i. Estimated annual production volume 400,000 units ii. Estimated direct labor cost per unit = $3.75 iii. Estimated indirect labor cost per unit = $0.92 iv. Estimated raw material and purchased part cost per unit = $32.50 v. All other costs are independent of production volume and are estimated at $800,000 per year.Explanation / Answer
Solution:
$(3.75+0.92+32.5+X) = (800,000÷400,000)
X = 2-(37.17$) = 35.17$
Profit on each unit = 35.17$
Avg cost per unit = 37.17+35.17 = 72.34$