A car manufacturer produces three models of vehicle, X, Y and Z. It has calculated the

costs of these three products to be as follows:

х

Y

N

Z

Variable material costs ($ m) 5

10

8

Variable labour costs ($ m) 10

14

6

Allocated fixed costs ($ m) 9

12

6

Annual output of vehicles 4000

12000

5000

The total variable cost of manufacturing Model X = $ 15 million

Total cost of manufacturing Model X = $15 million + $9 million = $24 million

$24 000 000 - $6000 per vehicle

The average cost per unit of X = .

4000 units

a Calculate the total variable cost of manufacturing vehicle Models Y and Z.

b Calculate the total cost of manufacturing Models Y and Z.

c Calculate the average cost of manufacturing Models Y and Z.

d Identify and explain two possible uses of these results to managers of the car

manufacturer