Variable costs, fixed costs, relevant range. gumball's manufactures jaw-breaker candies in a fully automated process. the machine that produces candies was purchased recently and can make 4,400 per month. the machine costs s9,500 and is depreciated using straight-line depreciation over 10 years assuming zero residual value. rent for the factory space and warehouse and other fixed manufacturing overhead costs total $1,300 per month. gumball's currently makes and sells 3,100 jaw-breakers per month. gumball's buys just enough materials each month to make the jaw-breakers it needs to sell. materials cost 10 cents per jawbreaker. next year dotball expects demand to increase by 100%. at this volume of materials purchased, it will get a 10% discount on price. rent and other fixed manufacturing overhead costs will remain the same. 1. what is gumball's current annual relevant range of output? 2. what is gumball's current annual fixed manufacturing cost within the relevant range? what is the annual variable manufacturing cost? 3. what will gumball's relevant range of output be next year? how, if at all, will total annual fixed and variable manufacturing costs change next year? assume that if it needs to dotball could buy an identical machine at the same cost as the one it already has.

1.- the current relevant range will be up to 52,800 as that is the maximum a single machine can produce.

2.- fixed manufacturing cost: 16,550

    materials cost:                      3,720

3.- relevant range 105,600

annual fixed cost:                  17,500

variable manufacturing cost 6,696

Explanation:

1.- production 4,400 units per month x 12 months = 52,800

2.-

depreciation on machine: 9,500 / 10 year =950

rent espace 1,300 per month x 12 months = 15,600

total fixed: 16,550

variable manufacturing: 10 cent per unit of materials

sale: 3,100 per month x 12 month x 10 cent per unit  = 3,720

3.-

we are going to need an addiional machine those the relevant range will be of 52,800 per machine x 2 = 105,600

fixed cost:

depreciation: 950 per machine x 2 = 1,900

rent espace:                                       15,600  

Total fixed manufacturing                   17,500

variable manufacturing:

cost per unit: 10 cent less 10% discount = 9 cent

6,200 per month x 12 month x 9 cent = 6,696

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answer(d) all of the choices are correct;