A. identify each cost as being variable, foxed, or mixed B. Develope an equation

Question

A. identify each cost as being variable, foxed, or mixed

B. Develope an equation for total monthly production costs

C. Predict total costs for a monthly production volume of 8,000 units.

Produciton volume 7,000 10,000 Direct materials 70,000 100,000 Direct labor 56,000 80,000 Indirect Materials 21,000 30,000 Supervisors salaries 12,000 12,000 Depreciation on Plant 10,000 10,000 Maintenance 32,000 44,000 Utilities 15,000 21,000 Insurance on plant and equipment 1,600 1,600 Property taxes on plant 2000 2000 Total 219,000 300,000

Explanation / Answer

Ans A Produciton volume 7,000 10,000 8000 units Ans c Cost per unit Variable Cost Direct materials 70,000 100,000 80000 10 Direct labor 56,000 80,000 64000 8 Indirect Materials 21,000 30,000 24000 3 Total A 147,000 210,000 168,000 21 Mixed Cost Maintenance 32,000 44,000 Utilities 15,000 21,000 Total B 47,000 65,000 53000 Fixed Cost Supervisors salaries 12,000 12,000 12,000 Depreciation on Plant 10,000 10,000 10,000 Insurance on plant and equipment 1,600 1,600 1,600 Property taxes on plant 2000 2000 2000 Total C 25,600 25,600 25,600 Total Cost A+B+C 246,600 Anc C b) First bifurcate mixed cost by y= a+bx Units x Amount y x^2 XY 7000 47000 49000000 329000000 10000 65000 100000000 650000000 17000 112000 149000000 979000000 b=((2*979000000)-(17000*112000))(/2*149000000-(17000)^2) 6 Variable cost a=(112000-(17000*6))/2 5000 y=5000+6*8000 53000

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