Delivery Mailbox produces decorative mailboxes. The company\'s average cost per

Question

Delivery Mailbox produces decorative mailboxes. The company's average cost per unit is $22.43 when it produces 1,200 mailboxes. Requirements 1. What is the total cost of producing 1,200 mailboxes? 2. If $18,516 of the total costs are fixed, what is the variable cost of producing each mailbox? 3. Write Delivery Mailbox's cost equation. 4. If the plant manager uses the average cost per unit to predict total costs, what would the forecast be for 1,600 mailboxes? 5. If the plant manager uses the cost equation to predict total costs, what would the forecast be for 1,600 mailboxes? 6. What is the dollar difference between your answers to questions 4 and 5? Which approach to forecasting costs is appropriate? Why? Requirement 1. What is the total cost of producing 1,200 mailboxes? The total cost of producing 1,200 mailboxes is $ Requirement 2. If $18,516 of the total costs are fixed, what is the variable cost of producing each mailbox? The variable cost per unit is S Requirement 3. Write Delivery Mailbox's cost equation. Requirement 4. If the plant manager uses the average cost per unit to predict total costs, what would the forecast be for 1,600 mailboxes? The total cost is $ Requirement 5. If the plant manager uses the cost equation to predict total costs, what would the forecast be for 1,600 mailboxes? The total cost is $

Explanation / Answer

Variable cost per unit = $8400 / 1200 mailboxes = $7 per mailbox

Y = $18516 + $7.X

Y = $18516 + $7 x 1600 = $18516 + $11200 = $29716

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