Question
Nova Enterprises needs to analyze the behavior of three different costs over a period of three months. Month Units Produced Total Cost P Cost per
Nova Enterprises needs to analyze the behavior of three different costs over a period of three months.
| Month | Units Produced | Total Cost P | Cost per Unit P | Total Cost Q | Cost per Unit Q | Total Cost R | Cost per Unit R |
|---|---|---|---|---|---|---|---|
| 1 | 1,000 | $3,000 | $5,000 | $2,500 | |||
| 2 | 3,000 | $3,000 | $7,000 | $7,500 | |||
| 3 | 500 | $3,000 | $4,500 | $1,500 |
Required: a. Calculate the cost per unit for each type of cost and classify them as fixed, variable, or mixed. Justify your answers.
b. Explain the implications of cost behavior analysis for pricing strategies.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Solution To address the problem we will start by calculating the cost per unit for each type of cost P Q and R for each month Then we will classify th...
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Step: 3
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Managerial Accounting
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
12th Edition
978-0073526706, 9780073526706
