Forming a bond with a customer implies that the sales representative builds an emotional relationship with the customer

Computing and interpreting manufacturing unit costs

Minnesota Office Products (MOP) produces three different paper products at its Vaasa lumber plant: Supreme, Deluxe, and Regular. Each product has its own dedicated production line at the plant. It currently uses the following three-part classification for its manufacturing costs: direct materials, direct manufacturing labor, and manufacturing overhead costs. Total manufacturing overhead costs of the plant in July 2014 are $150 million ($15 million of which are fixed). This total amount is allocated to each product line on the basis of the direct manufacturing labor costs of each line. Summary data (in millions) for July 2014 are as follows: Supreme Deluxe Regular Direct material costs $ 89 $ 57 $ 60 Direct manufacturing labor costs $ 16 $ 26 $ 8 Manufacturing overhead costs $ 48 $ 78 $ 24 Units produced 125 150 140 Required: 1. Compute the manufacturing cost per unit for each product produced in July 2014. 2. Suppose that, in August 2014, production was 150 million units of Supreme, 190 million units of Deluxe, and 220 million units of Regular. Why might the July 2014 information on manufacturing cost per unit be misleading when predicting total manufacturing costs in August 2014?

The product life-cycle concept from microeconomics and marketing provides useful insights into the relations between cash flows from operating, investing, and financing activities. At the beginning of the decline phase,

a. profitability increases. b. accounts receivable decline. c. inventories increase. d. all of the above. e. none of the above.