Letitia Corp. manufactures kitchen timers. The company incurred the following costs to produce 25,000 timers in May 2009.
Timer mechanisms.............................................. $11,250
Resin bases......................................................... 8,750
Direct labor......................................................... 9,000
Machinery depreciation (calculated on
a straight-line basis) .............................................. 3,750
Supervisory salaries................................................ 6,000
Utilities................................................................. 2,000
Total....................................................................... $40,750
Required:
(a) Considering behavior in relationship to activity changes, how would each of these costs be classified?
(b) What did each timer cost?
(c) If Letitia Corp. increases production in June 2009 to 30,000 units, what will be the total cost of each cost component? If you cannot determine the total cost of a cost component, discuss the reason.