ACC560 Week 4 Homework: Chapter 5: Cost-Volume-Profit and Chapter 6: CVP Analysi

Question

ACC560 Week 4 Homework: Chapter 5: Cost-Volume-Profit and Chapter 6: CVP Analysis Additional Issues ES-6 PCB Corporation manufactures a single product. Monthly production costs incurred in the manufacturing process are shown below for the production of 3,000 units. The util ities and maintenance costs are mixed costs. The fixed portions of these costs are $300 and $200, respectively Production in Units3,000 Production Costs Direct materials Direct labor Utilities Property taxes Indirect labor Supervisory salaries Maintenance Depreciation S 7,500 18,000 2,100 1,000 4,500 1,900 1,100 2,400 (a) Identify the above costs as variable, fixed, or mixed. (b) Calculate the expected costs when production is 5,000 units.

Explanation / Answer

1) Total costs Nature Total fixed costs Total Variable costs Variable cost Per unit (3000 units) Direct materials 7500 Variable 0 7500 2.5 Direct labor 18000 Variable 0 18000 6 Utilities 2100 Mixed 300 1800 0.6 Property taxes 1000 Fixed 1000 0 0 Indirect labor 4500 Variable 0 4500 1.5 Supervisory salaries 1900 Fixed 1900 0 0 Maintenance 1100 Mixed 200 900 0.3 Depreciation 2400 Fixed 2400 0 0 2) Expected costs when production is 5000 units Variable cost Per unit Total costs (5000 units) Direct materials 2.5 12500 Direct labor 6 30000 Utilities 0.6 3300 (0.6*5000+300) Property taxes 1000 Indirect labor 1.5 7500 Supervisory salaries 1900 Maintenance 0.3 1700 (0.3*5000+200) Depreciation 2400 Total costs 60300

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