Lopez Mfg. is interested in estimating fixed and variable manufacturing costs using data from October. Based on judgment, the plant manager classified each manufacturing cost as fixed, variable, or part fixed and part variable:

Required
a. Use account analysis to estimate fixed cost per month and variable cost per unit produced.
b. Based on your answer to part a, what is your estimate of the incremental cost of producing 500 units?

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Units Produced Cost October $136,100 Detail of Cost: Material Direct labor Depreciation Phone Other utilities Supervisory salaries Equipment repair Indirect materials Factory maintenance Cost Behavior 63,000 24,000 8,000 300 4,500 25,200 6,500 Variable Variable Fixed Fixed 20% Fixed 75% Fixed 20% Fixed Variable 80% Fixed 4,000 $136,100 Total